The bookmakers winning margin is the percentage amount of profit a bookmaker takes from a betting market. To calculate this amount it is necessary to first convert the odds of each possible outcome into a percentage. We will again use the odds for the Liverpool vs Manchester City match as an example. The odds on the three outcomes are as follows.
- Liverpool win: 7/5
- Draw: 11/5
- Manchester City win: 12/5
To convert odds of A/B to a percentage chance, use the formula B/(A+B), e.g for odds of 7/5 the calculation is 5/(7+5)= 41.67. Therefore, the Percentage chance for each of the above outcomes is:
- Liverpool win: 41.67%
- Draw: 31.25%
- Manchester City win: 29.41%
To calculate the bookmakers margin on this – or any other – market, we simply add these percentages together and then subtract 100%.
- (41.67%+ 31.25% + 29.41%) – 100% = 2.33% The bookmakers profit margin in this instance is therefore 2.33%.