Quick answer
Bookmakers make money mainly through the margin built into their odds. The prices on all outcomes of a market add up to more than 100% probability, so for every $100 staked across a market the bookmaker expects to keep a few dollars, whatever the result.
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The short answer
A bookmaker does not need to know who will win. It sets prices so that, across all possible results, it keeps a small percentage of everything staked. That percentage is called the margin (also called the overround or "vig").
A fair coin, then a bookmaker's coin
Imagine a coin toss. Heads and tails are each 50% likely. Fair odds for each would be 2.00 (because 100 ÷ 50 = 2.00).
If 100 people each bet $1 on heads and 100 people each bet $1 on tails at 2.00, the bookmaker takes $200 and pays out $200 to the 100 winners. It makes nothing.
Now the bookmaker offers 1.90 on both sides instead. Same $200 staked. It pays 100 winners × $1.90 = $190. It keeps $10, whatever the result. That $10 is the margin at work.
A football example
Here are example prices for Dynamos vs CAPS United:
| Outcome | Odds | Implied probability (100 ÷ odds) |
|---|---|---|
| Dynamos win | 2.50 | 40.00% |
| Draw | 3.10 | 32.26% |
| CAPS United win | 2.90 | 34.48% |
| Total | 106.74% |
In a fair market the three probabilities would add up to exactly 100%. Here they add up to 106.74%, so the bookmaker's margin on this market is about 6.7%.
Roughly speaking, if money were spread across the outcomes in line with these prices, the bookmaker would expect to keep about $6.30 of every $100 staked, whatever the score (a 6.74% overround works out at roughly 6.3% of the money staked). You can check any market yourself with the margin section of our implied probability calculator.
Accumulators multiply the margin
Each selection in an accumulator carries its own margin, and when the odds are multiplied together, the margins are multiplied too. A five-leg accumulator can carry a combined margin far bigger than any single bet. This is one reason bookmakers promote multibets and "acca boosts".
Other ways bookmakers earn
- Casino and crash games such as Aviator have a built-in house edge on every round.
- Bonuses with wagering requirements keep money in play. A bonus usually has to be bet several times before it can be withdrawn, and the margin applies each time. See wagering requirement.
- Limiting winning customers. Some bookmakers reduce the maximum stake for customers who win consistently. Check each bookmaker's terms.
- Fees on some withdrawals, or on deposits withdrawn without being used for betting. For example, some bookmakers' terms charge a fee when un-wagered deposits are withdrawn.
What this means for you
- The average punter loses. Because of the margin, the more you bet, the closer your results tend to get to a loss of roughly the margin.
- Winning streaks happen, but they do not change the maths. A good week does not mean you have beaten the system.
- Betting is entertainment with a cost. Decide in advance how much you are willing to spend, as you would for a match ticket. Read bankroll management for beginners.
Common misunderstandings
- "Bookmakers want me to lose specific bets." They mostly want balanced books and steady margins, not to beat individuals.
- "Odds that look generous mean the bookmaker made a mistake." Occasionally prices are wrong, but the margin is usually still there.
- "If I bet on favourites, I can't lose." Favourites lose often, and their low odds still contain the margin.
Summary
- The margin is the gap between the bookmaker's odds and fair odds.
- Add up 100 ÷ odds for every outcome: anything above 100% is the margin.
- Margins multiply in accumulators.
- Over time, the margin means most punters lose money.