How Bookmakers Set Odds & The Margin

The Bookmaker’s Edge

Bookmakers are businesses. They build a profit margin (called the “overround” or “vig”) into every set of odds. Understanding this is crucial.

How Margins Work

In a fair coin flip, both sides should be 2.00 (50/50). But a bookmaker might offer 1.90 on heads and 1.90 on tails. The implied probabilities add up to 105.3% instead of 100% — that extra 5.3% is the bookmaker’s margin.

Why It Matters

A lower margin means better value for you. Compare: Bookmaker A offers 1.85/3.50/4.20 vs Bookmaker B offers 1.90/3.60/4.50. Bookmaker B has a lower margin = better value.

Typical Margins

• Top-tier bookmakers: 2-5% margin on major football
• Average bookmakers: 5-8% margin
• Poor value: 10%+ margin (avoid these)

Value Betting

A “value bet” is when you believe the true probability is higher than the implied probability. If you think Arsenal has a 60% chance of winning but the odds imply only 50%, that is a value bet at 2.00.