Understanding Bookmaker Margins
What Is a Bookmaker Margin?
A bookmaker margin (also called overround, vigorish, or "vig") is the built-in profit that a bookmaker earns regardless of the outcome. It is expressed as a percentage above 100% when you add up the implied probabilities of all outcomes in a market. Understanding margins is essential because they directly affect the value you receive on every bet.
How the Overround Works
In a fair market with no margin, the implied probabilities of all outcomes would sum to exactly 100%. For example, in a coin flip: heads at $2.00 (50%) and tails at $2.00 (50%) = 100% total. No margin, neither side has an edge.
I check margins before I open an account with any new bookmaker. For head-to-head AFL and NRL markets, I expect margins under 4%. For racing, anything under 15% on win markets is reasonable. If a bookmaker is running 7-8% margins on AFL, they're taking too much out of every dollar you bet. I've mapped margins across 10+ Australian operators, and the difference between the best and worst adds up to hundreds of dollars per season.
In reality, a bookmaker might price heads at $1.91 (52.4%) and tails at $1.91 (52.4%). The total implied probability is 104.8%, meaning the overround is 4.8%. This 4.8% is the bookmaker's theoretical profit margin.
Use our margin calculator to compute the overround on any market.
Calculating the Margin
For a two-outcome market: Margin = (1/odds_a + 1/odds_b - 1) × 100%
Example: Team A at $1.75, Team B at $2.20. Margin = (1/1.75 + 1/2.20 - 1) × 100% = (0.571 + 0.455 - 1) × 100% = 2.6%.
For three-outcome markets (e.g., soccer 1X2): Margin = (1/home_odds + 1/draw_odds + 1/away_odds - 1) × 100%. Soccer markets typically have margins of 4-8% because there are three outcomes.
For racing markets with many runners, margins can be much higher, 15-30% is common in horse racing fixed-odds markets. This is why racing bettors should compare fixed odds against tote odds, as tote pools have different margin structures.
Why Margins Matter
Every dollar of margin comes out of the bettor's potential return. A 2% margin bookmaker gives you better long-term returns than a 6% margin bookmaker, even if the difference on a single bet seems small. Over 1,000 bets, the cumulative difference is substantial.
Example: 1,000 bets at $20 each = $20,000 total wagered. At a 2% margin, the bookmaker's theoretical take is $400. At a 6% margin, it is $1,200. That $800 difference comes directly from your returns.
How to Find Lower-Margin Odds
Compare across bookmakers: Different operators price the same market differently. The best price on Team A might be at Bookmaker X, while the best price on Team B is at Bookmaker Y. Shopping for the best odds is the single most effective way to reduce your exposure to margins.
Use betting exchanges: Exchanges like Betfair typically offer lower effective margins (1-3%) because you are betting against other punters rather than against the bookmaker. The exchange charges commission on winnings instead of building margin into the odds.
Bet on popular markets: Main markets (match winner, line, total) usually have tighter margins than exotic or niche markets. Player prop markets, for example, often carry margins of 8-15%.
Responsible Gambling
Understanding margins should reinforce that the bookmaker always has a mathematical edge. No amount of odds comparison eliminates this edge entirely. Bet within your means and for entertainment. For support, call 1800 858 858.
Recommended Betting Sites
Based on our testing, these bookmakers offer the best experience for this type of betting:
Remember to gamble responsibly. Set limits before you start and never bet more than you can afford to lose. Call 1800 858 858 for support.