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How Odds are Placed by Bookmakers

How do bookmakers set odds? What factors influence the odds? Learn more about the process of odds formation and how it impacts your betting strategies.

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Table of Contents

  • 1. Understanding Odds Formation
  • 2. Calculating the Bookmaker's Margin
  • 3. Key Takeaways for Successful Betting


Both novice and experienced gamblers share a common goal: to bet under the most advantageous conditions possible, thus enhancing their financial wellbeing. Ultimately, your betting profit hinges on the odds offered by bookmakers. This leads to the inevitable question: Why do odds vary across different bookmakers, and how do they ensure profits?

1. Understanding Odds Formation

The process of setting odds is influenced by two primary factors: the probability of various outcomes and the bookmaker's margin. The concept of probability is straightforward—the odds reflect the likelihood of each outcome, with lower odds indicating a higher probability of occurrence. Conversely, underdogs are assigned higher odds. Moreover, a bookmaker may lower the odds if an outcome's likelihood increases.

Margin, on the other hand, represents the bookmaker's commission or net earnings, regardless of the bet's outcome. When placing a bet, you are essentially paying this margin, often without realizing it.

2. Calculating the Bookmaker's Margin

To understand margin, consider a scenario with two equally matched competitors, where each has a 50/50 chance of winning:

Probability: Imagine the win probability for both teams is 0.5.

Odds: Ideally, bookmakers should set odds at 2. However, they might incorporate a 10% margin, effectively lowering the odds. If the margin is evenly split (5% per team), the perceived chances increase to 55% (or 0.55) from 50%.

In essence: For a 50% chance, you'd need to bet at odds of @2, whereas for a 55% chance, the odds would be @1.82.

Margins can vary significantly among bookmakers, ranging from 2% to 20%. Pinnacle, for instance, is known for its low margin of merely 2%, relying on a large user base rather than high margins to generate profits.

3. Key Takeaways for Successful Betting

The strategy for successful betting is straightforward: seek the most favorable betting conditions by:

  • Finding bookmakers that offer the best odds and the lowest margins. Utilizing services like ArbiChat, available at ArbiChat, can aid in this endeavor.
  • Exploring surebets to secure guaranteed returns, effectively circumventing the concept of "margin" by betting on opposing outcomes across different bookmakers.