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Football in Cider now publishes the bookmakers profit margin for each and every game it predicts. Knowing the bookmakers margin can tell us many things such as how confident the bookmaker is with the odds they are offering on the match.

 

Bookmakers Margin

 

As punters, sometimes we think the odds are literally stacked in the bookies favour. They have huge resources such as fast computers, inside contacts & tens of clever mathematicians. But at the end of the day, they are taking bets on a football match of which they have as little control over the result as we do. They are always taking a risk, sometimes worth millions of dollars, by accepting bets on sports matches. Bookmakers therefore spend a lot of money working out accurate probabilities and offering odds below these probabilities to reduce their risk. This difference between the probability and odds is called the bookmakers profit margin.

Let's make sure we understand what a bookmakers profit margin is. A bookmakers profit margin is the difference between the probability (in the eyes of the bookmaker) and the odds they offer. It is easier to understand using the example of tossing a coin. We know that a coin toss has 2 outcomes each with a 50% probability. Bookmakers will start by offering odds of below 2 for each outcome. If they offered above 2 for both outcomes then they would lose money because they would have to pay out more in winnings than the total stakes they received. So they start of offering odds slightly lower, say 1.8. Betting is very competitive, so if they go too low, they will lose their customers to alternative bookmakers. We discussed this coin toss example in an earlier article.

In this article the main point for us to understand is that bookmakers (normally) offer odds lower than the probability of the outcome eventuating. The difference is called the profit margin and it is how the bookmaker makes money.

Now, as successful punters one reason we are interested in knowing the profit margin is so o that we can take advantage of any discrepancies. At Football in Cider our whole Top Tip betting makes a profit by taking advantage of mistakes by bookmakers when they work out their probabilities and therefore their profit margins. Another example is the arbitrage games we publish. These games take advantage of situations when difference bookmakers publicly have different views on probabilities meaning we can cherry pick our bookmakers to not only remove the profit margin, but reverse it into a profit for us! This allows us to manufacture a no risk profit. These arbitrage situations happen more often than you may think, but they only last for a short period so you need to be looking for them constantly (or let FiC do the work for you and simply enjoy the fact we publish these games for free!)

Knowing the bookmakers profit margin can allow us to use a simple betting system to make money.  By betting on the favourite when the bookmakers profit margin is small. Although there are lots of reasons that the margin could be small, it is, more often than not, small because the bookmaker is confident on their calculations. They feel they do not need to make much money from the game because they are confident they have worked out accurate probabilities. If you then follow this to its conclusion, then you can trust the bookmaker and bet on the favourite.

Conversely, you can avoid betting when the margin is not small. By only selecting low profit margin favourites you can make a tidy profit in the long term. This system has some assumptions and a significant one is that bets made by punters have followed the normal patterns with no unusual discrepancies. That is, both you and the bookmaker are not expecting any surprises. Assuming the bookmaker knows what they are doing, by utilising their Goliath like resources, then you can assume they have picked the favourite for a reason. If you do follow this system, then you must choose a bookmaker that is friendly to such betting. They watch for this pattern of betting and close the doors if you consistently win largish sums of money in the long run.

One way to stay below the bookies radar is to sometimes not back the favourite. When should you do this? When the margin is large of course! The margin is bigger than normal when bookmaker isn't confident about their calculated probabilities. There could be a new manager, or an injury for example. The bookie will then build in a larger probability to cover their increased risk. From our punters point of view this (may) mean the outside chance is more likely, ceteras paribus.

One thing to keep in mind is that odds are often set for reasons other than probabilities. For example, sometimes a popular team will attract large bets even though their likelihood of winning is low. In this example the bookmaker will also be forced to increase their profit margin so that they are not left high and dry should the popular team actually win! These games often allow arbitrage opportunities, so its not all bad!

So knowing the bookmakers profit margin can give us an insight into the inner workings of the bookmaker and highlight potential opportunities to make money.

You can find the bookmakers margin for each and every game on the Sports Details pages on Football in Cider.