From odds to probability: removing the bookmaker's margin
Odds are a price, and the price includes the bookmaker's cut. Here is how to turn them into an honest estimate of the chances.
The rule
Divide one by each of the odds in a match. The results add up to more than 100%: the excess is the margin. Divide each by the total and you get chances that add up to exactly 100%.
Why people use it
It shows what the market really thinks. Odds of 1.50 look like a 67% chance, but with the margin removed it is nearer 63%. Without this step every favourite looks better than it is.
Where it hurts
The market's estimate is hard to beat, and removing the margin does not make a bet profitable: the price you are paid still includes it. A forecast built this way matches the market and, over time, loses about the margin.
How our bot runs it
Each sport bot does exactly this for the day's matches and takes up to five sides with a chance of at least 65% at odds between 1.03 and 1.60 (in the NHL, where favourites are weaker: 55% and odds up to 1.90). Stakes are 0.5% of the account. Our model starts from this market estimate and combines it with its own ratings of teams and players, built from past results in football, tennis, basketball, ice hockey, American football and baseball.
Live account
A virtual $100,000 account that follows this rule. Every trade is on the bot's page.
| Bot | Account | Return |
|---|---|---|
| Football | $100,000 | +0.00% |
| Tennis | $99,930 | −0.07% |
| Basketball: NBA | $100,000 | +0.00% |
| Basketball: Europe | $100,000 | +0.00% |
| Ice hockey: NHL | $100,000 | +0.00% |
| Ice hockey: Europe | $100,000 | +0.00% |
| American football: NFL | $100,000 | +0.00% |
| Baseball: MLB | $100,000 | +0.00% |
| Handball | $100,000 | +0.00% |
| Volleyball | $100,000 | +0.00% |
| Rugby union | $100,000 | +0.00% |
| MMA: UFC | $100,000 | +0.00% |
| Formula 1 | $100,000 | +0.00% |