How bookmakers make their money: Margins, odds, and betting lines

Greetings, ladies and gentlemen!

I've noticed an interesting thing: most people in the betting world don't know - or, what's even worse, don't understand - the most important thing: how bookmakers make money. Why is it vital to know and understand this? The answer is simple: we and the bookmaker are on opposite sides of the pitch. And the goose that lays the golden eggs is right in between us. Either we make a profit, or the bookmaker does - there will be no draw. That's why we must study our opponent thoroughly.

To help you make informed bets, I'll start with the basics: how odds are set, what the bookmaker's margin is, and how betting lines work.

The odds are numbers that show the probability of an event according to the bookmaker, and the potential payout for the player. For example, odds of 2.00 mean the bookmaker estimates the likelihood at 50%. If you stake €100, you'll receive €200 back (including the stake). The net profit is €100 in this case.

Probability formula for the odds: (1 / odds) × 100%.

Example: The odds of 2.50 mean the probability is roughly 40%.

There are three common formats for the odds: decimal (2.50), fractional (1.5/1), and American (+150). What's really important to remember: the odds are not an exact prediction, but a balance between probability and bettor interest. That's why you should always pay attention to odds and analyse them critically.

The margin is the built-in commission that guarantees the bookmaker's profit. For example, there's a tennis match between two equally strong players. Theoretical probability is 50% each, so the fair odds should be 2.00 for both players. However, the bookmaker sets, for example, the odds of 1.90 for each player. Adding these probabilities sums to 105.2%. Bookmaker's margin is everything above 100%, so in this case, the margin is 5.2%.

The higher the margin, the less profitable the bet is for the player. Understanding how the margins work helps you see where conditions are more favourable for betting, as the margins vary across sports and bookmakers:

• Top matches: 3-5%
• Lesser-known events: 7-12%

Betting lines are the list of events and outcomes you can bet on. They are created by the bookmaker's analytics team, using statistics and various algorithms, while also copying lines from leading global bookmakers. The lines include not only the main outcomes of the event, such as win, draw, or loss, but also plenty of additional ones: totals, handicaps, player-specific props, etc. The lines are dynamic, with odds shifting all the time based on statistics and news (injuries, weather, lineups), as well as the overall betting volume (if too many people bet on one side).

Important thing to note: bettors only see the final result of the bookmaker's algorithms. However, understanding the principles will help you spot errors and inflated odds.

Key takeaways:

• Odds represent probabilities
• Margin is the profit of the bookmaker
• Betting lines are the main tool for wagering

The bookmaker will always have a mathematical advantage, but bettors can and should look for value bets, where the odds are higher than the true probability. Understanding these basics is the first step to conscious, strategic betting.

Serge Gorelikov is a professional sports bettor whose column will be published at MightyTips weekly. He'll explain how the betting world works and talk about various aspects of the game - from the basics to advanced stuff, which will be useful to experienced bettors too. For his bets, please follow our official Telegram channel.