How the margin is calculated
The implied probability of a price is its inverse. On a complete market, the true probabilities add up to exactly 100%: one of the outcomes will happen. The implied probabilities, though, add up to more than 100%. The excess is the bookmaker's margin: margin = Σ(1/cᵢ) − 1.
To remove the margin, the calculator divides each implied probability by the sum (proportional method) and derives the fair odds. It is a good approximation; the finer methods (power, Shin), which correct for bookmakers loading more margin onto underdogs, are the ones Babeth applies to the reference odds.
Example
A 1X2 priced 2.10 / 3.40 / 3.60: 0.476 + 0.294 + 0.278 = 1.048, i.e. a 4.8% margin. Fair probabilities: 45.4% / 28.1% / 26.5%; fair odds: 2.20 / 3.56 / 3.77. On this market, any price offered below the fair odds costs you money on every bet.
Frequently asked questions
What is a normal margin?
About 2% at Pinnacle on the major markets, 5 to 8% at most mainstream bookmakers, 10% and more on exotic markets or minor leagues. At a 6% margin, a bettor who stakes €200 a week pays about €600 a year, whatever their results.
Is the margin the same on every outcome?
No: bookmakers generally load more margin onto underdogs than onto favourites (the favourite-longshot bias). The proportional method ignores this; the power and Shin methods correct it. That is why the fair odds of an underdog are often higher than a simple calculation suggests.
How does Babeth measure bookmakers' margins?
By reading their odds every 45 seconds on thousands of markets and comparing each price with the reference fair odds. The Bookmakers page shows each operator's real activity; these measurements are also used to grade every bet in the selection.