Those of you who are familiar with the mathematics of sports betting will know that bookmakers fund their services through bookmaker margins. Margin are effectively hidden transaction fees which provide the bookmaker’s profit margins for betting markets. For example, a line/handicap market with odds of 1.91 will have a margin of 4.7%. Not all bookmakers use the same margins, however, so better value can be obtained by using bookmakers that employ lower margins. Pinnacle Sports, for example, use 1.952 lines which equate to a margin of 2.45%. From a punter’s perspective, the lower the margin, the better.
This article looks at the impact of bookmaker membership combinations on effective bookmaker margins. Because bookmakers offer slightly different odds on upcoming markets, holding multiple bookmaker memberships enables you to shop around for the best available odds. This in turn reduces the effective bookmaker margin that applies to the market. Using Australian Football League (AFL), English Premier League (EPL) and National Rugby League (NRL) head-to-head markets, we were able to reduce bookmaker margins to less than 1.00% by using just a handful of bookmakers. Maintaining awareness of bookmaker margins is important because a small change can impact whether you make a long-term profit or loss.
What are Bookmaker Margins?
When a bookmaker sets the odds for a market they first estimate the probability of each possible outcome. For example, in a market on a coin toss winner, the bookmaker will calculate the probability of each team winning the toss as 50%. When using decimal odds, the fair odds equal the reciprocal of the bookmaker’s estimated probability, in this case 1 / 0.50 = 2.00. To fund their operation, the bookmaker adjusts these odds downward to create a profit margin for the market. For example, typical bookmaker odds on a team winning a coin toss are 1.91 rather than 2.00. The difference between the published odds (1.91) and the fair odds (2.00) is due to the bookmaker margin.
The bookmaker margin finances bookmaker services but agencies vary in the margins they apply. From a punter’s perspective, the lower the margin, the better. The difference between 1.90 and 1.92 line odds may not seem significant for a single wager, but when betting repeatedly this difference has a compounding effect. This can easily make the difference between winning and losing money.
Calculating Bookmaker Margins
When using the decimal odds system, which is popular in Australia and Europe, the margin equals the sum of the reciprocals of the odds, minus one. Below are calculation examples using two-outcome and three-outcome events.
The margin is amount by which the market exceeds 100%.
Note that for a 100.0% market the margin is zero. If you compile the best available odds across a number of bookmakers and the combined market is below 100.0%, then the margin is negative, which means an arbitrage opportunity may exist.
Why Bookmaker Membership Combinations Reduce Margins
Pinnacle Sports offers lower margins, and therefore the best value odds for most sporting markets, so you may wonder why you would benefit from combining a Pinnacle Sports membership with a bookmaker that uses higher margins. The reason is that while Pinnacle Sports does offer the lowest margins, it won’t necessarily offer the best odds for every selection.
If you visit our Bookmaker Odds Comparison section you can view the best available surveyed odds for each market. Below are odds for an upcoming EPL fixture:
Note that Pinnacle Sports has a bookmaker margin of: 1/1.88 + 1/3.69 + 1/4.59 -1 = 2.08%. This is far lower than the margin offered by Sportingbet (1/1.9 + 1/3.5 + 1/4 – 1 = 6.20%).
However, if we have memberships with both Pinnacle Sports and Sportingbet we can take advantage of the best available odds across the two bookmakers. In the example above Sportingbet offer higher odds on Southampton while Pinnacle Sports offer higher odds on the draw and on Newcastle. If we take advantage of these odds our margin drops to 1/1.9 + 1/3.69 + 1/4.59 – 1 = 1.52%.
Bookmaker Combinations Survey
Using 19 bookmakers and betting exchanges that offer Australian dollar accounts, we calculated how low we could get the effective average margin by using a combination of bookmaker memberships. The survey was run using one round of fixtures for the AFL, EPL and NRL. The odds were observed at roughly the same time for all 19 bookmakers.
AFL
Using AFL head-to-head markets, the table below ranks the bookmakers and bookmaker combinations in descending order of bookmaker margin. The margins displayed represent the average margin for the fixtures observed. The Equivalent Line column shows the line odds that equate to the corresponding margins.
| Bookmaker / Bookmaker Combination | Margin | Equivalent Line |
|---|---|---|
| 10Bet | 5.54% | 1.8955 |
| ComeOn | 5.54% | 1.8955 |
| WBX | 5.51% | 1.8951 |
| Sportingbet | 5.17% | 1.902 |
| Betfred | 4.90% | 1.907 |
| Betezy | 4.88% | 1.907 |
| bet365 | 4.77% | 1.909 |
| Unibet | 4.61% | 1.912 |
| Ladbrokes | 4.52% | 1.914 |
| Palmerbet | 4.51% | 1.914 |
| Luxbet | 4.31% | 1.917 |
| Sportsbet | 4.18% | 1.920 |
| Matchbook | 2.93% | 1.943 |
| Betfair | 2.63% | 1.949 |
| Pinnacle Sports | 2.55% | 1.950 |
| COMBO: Pinnacle Sports, Betfair | 1.60% | 1.968 |
| COMBO: Pinnacle Sports, Betfair, bet365 | 1.16% | 1.977 |
| COMBO: Pinnacle Sports, Betfair, bet365, Sportsbet | 1.07% | 1.979 |
| COMBO: Pinnacle Sports, Betfair, bet365, Sportsbet, 10Bet | 0.93% | 1.982 |
Pinnacle Sports offered the best value of any individual agency, with an average margin of 2.55%, however by using Pinnacle Sports in combination with Betfair (commission adjusted), we were able to reduce the margin to 1.60%. Adding bet365, then Sportsbet and 10Bet reduced the margin to 0.93%.
Note that while 10Bet offered the highest margins, reflecting the poorest value odds, the addition of 10Bet to a portfolio of bookmaker memberships did reduce the average margin because it offered the best value for particular selections.
EPL
Using English Premier League head-to-head markets, the table below ranks the bookmakers and bookmaker combinations in descending order of bookmaker margin. The margins displayed represent the average margin for the fixtures observed. The Equivalent Line column shows the line odds that equate to the corresponding margins.
| Bookmaker / Bookmaker Combination | Margin | Equivalent Line |
|---|---|---|
| Sportingbet | 7.59% | 1.859 |
| Luxbet | 7.49% | 1.861 |
| SBOBET | 6.97% | 1.870 |
| Betfred | 6.11% | 1.885 |
| Sportsbet | 5.79% | 1.891 |
| 10Bet | 5.59% | 1.894 |
| Ladbrokes | 5.24% | 1.900 |
| Titan Bet | 5.15% | 1.902 |
| Winner | 5.15% | 1.902 |
| Betezy | 5.13% | 1.902 |
| WBX | 4.81% | 1.908 |
| Palmerbet | 4.76% | 1.909 |
| Unibet | 4.11% | 1.921 |
| Betfair | 3.79% | 1.927 |
| ComeOn | 3.15% | 1.939 |
| bet365 | 2.60% | 1.949 |
| Pinnacle Sports | 2.00% | 1.961 |
| Smarkets | 1.91% | 1.962 |
| Matchbook | 1.83% | 1.964 |
| COMBO: Matchbook, Pinnacle Sports | 1.25% | 1.975 |
| COMBO: Matchbook, Pinnacle Sports, bet365 | 1.10% | 1.978 |
| COMBO: Matchbook, Pinnacle Sports, bet365, Ladbrokes | 0.96% | 1.981 |
| COMBO: Matchbook, Pinnacle Sports, bet365, Ladbrokes, Smarkets | 0.87% | 1.9828 |
| COMBO: Matchbook, Pinnacle Sports, bet365, Ladbrokes, Smarkets, Sportingbet | 0.86% | 1.9829 |
It’s worth noting that the betting exchanges Smarkets and Matchbook offered better value odds than Pinnacle Sports for the fixtures we observed, however Matchbook combined with Pinnacle Sports generated the lowest average margin for any combination of two memberships. With an average margin of 2.60%, the betting giant bet365 also performed very well, offering the best value odds of any Australian-licensed operator, with the likes of Luxbet and Sportingbet performing poorly.
NRL
Using NRL head-to-head markets, the table below ranks the bookmakers and bookmaker combinations in descending order of bookmaker margin. The margins displayed represent the average margin for the fixtures observed. The Equivalent Line column shows the line odds that equate to the corresponding margins.
| Bookmaker / Bookmaker Combination | Margin | Equiv. Line |
|---|---|---|
| 10Bet | 6.13% | 1.884 |
| ComeOn | 6.13% | 1.884 |
| Betfred | 4.85% | 1.907 |
| bet365 | 4.81% | 1.908 |
| WBX | 4.81% | 1.908 |
| Titan Bet | 4.63% | 1.911 |
| Winner | 4.63% | 1.911 |
| Ladbrokes | 4.51% | 1.914 |
| Unibet | 4.49% | 1.914 |
| Luxbet | 4.44% | 1.915 |
| Betezy | 4.36% | 1.916 |
| Palmerbet | 4.36% | 1.917 |
| Sportingbet | 4.35% | 1.917 |
| Sportsbet | 4.18% | 1.920 |
| Betfair | 3.02% | 1.941 |
| Matchbook | 2.89% | 1.944 |
| Pinnacle Sports | 2.61% | 1.949 |
| COMBO: Pinnacle Sports, Sportsbet | 1.40% | 1.972 |
| COMBO: Pinnacle Sports, Sportsbet, Betfair | 1.05% | 1.979 |
| COMBO: Pinnacle Sports, Sportsbet, Betfair, Titan Bet | 0.85% | 1.983 |
| COMBO: Pinnacle Sports, Sportsbet, Betfair, Titan Bet, Unibet | 0.76% | 1.9849 |
| COMBO: Pinnacle Sports, Sportsbet, Betfair, Titan Bet, Unibet, Ladbrokes | 0.73% | 1.9856 |
| COMBO: Pinnacle Sports, Sportsbet, Betfair, Titan Bet, Unibet, Ladbrokes, Matchbook | 0.70% | 1.9862 |
Once again, using just four bookmakers we were able to achieve bookmaker margins below 1.00%, with a 0.70% margin achieved with seven bookmakers. Note how quickly the margin drops with the combination of just two bookmakers. Pinnacle Sports had a margin of 2.61% but this dropped to 1.40% when paired with Sportsbet.
Conclusions
- Pinnacle Sports offered the lowest overall margins across the three sports, with average margins of 2.55%, 2.00% and 2.61% for the AFL, EPL and NRL, respectively.
- Using five bookmakers we were able to reduce the average effective margin to below 1.00% for all three leagues.
- For all three sporting codes, a Pinnacle Sports membership was required to achieve the lowest possible margin. For the Australian codes (AFL & NRL), Sportsbet and Betfair memberships were required. Other agencies that deserve a notable mention are
- Pairing the agencies with the lowest margins doesn’t necessarily provide the lowest possible overall margin. For example, in the EPL the betting exchange Smarkets had the second lowest margin but because its odds were strongly correlated with Matchbook, pairing Matchbook with Smarkets was not as beneficial as pairing Matchbook with Pinnacle Sports.
- In some instances, bookmakers employing some of the highest margins in the industry can still be a beneficial addition to a membership portfolio due to occasions when they offer the best available odds for a particular selection.
- There is a diminishing impact of adding additional bookmakers to a portfolio. The biggest improvement in margin was achieved by going from one membership to two bookmaker memberships, following by going from two to three memberships, then from three to four, etc. The marginal impact from that point on got smaller with each additional bookmaker. Note that this applies to a particular weekend of fixtures for a particular league only. Holding more memberships provides additional value if you bet on numerous sports.
Caveats
- The purpose of this study was to test how quickly effective bookmaker margins dropped when additional bookmakers were added to a portfolio of memberships. Apart from the prevalence of Pinnacle Sports for all three codes, don’t take the specific combinations too seriously because in any given week the best combination will consist of different bookmakers.
- The bookmaker margins figures shown reflect the average for the head-to-head market for each bookmaker. Some agencies like Sportingbet and WBX showed significant variation in margins from fixture to fixture, while other services like Pinnacle Sports were incredibly consistent.
Notes
- Ladbrokes, Betstar and Bookmaker.com.au share the same odds and markets so only Ladbrokes margins were shown in the results.
- Sportingbet, Centrebet and Tom Waterhouse share the same odds and markets so only Sportingbet margins were shown in the results.
- Titan Bet and Winner share the same odds and markets.
- 10Bet and ComeOn share the same markets and odds for the AFL and NRL, however ComeOn employs lower margins for the EPL.
- Titan Bet, Winner, 10Bet and ComeOn and 10Bet use win-draw-lose markets for the AFL and NRL rather than win-lose with the other bookmakers. In the event of a draw the bookmakers that employ win-lose markets return half payouts while these four bookmakers would only return a payout on the draw selection.
- The odds for the betting exchanges Betfair, Matchbook, Smarkets and WBX were adjusted for their respective commissions. For exchanges where the commission depends on the user’s recent account activity, the maximum commission was used.