# How are the coefficient and bookmaker margin generated?

03 Oct, 2018

The formation of coefficients in all bookmakers is taking into account two main factors - the probability of the outcome of the event and the margin of the bookmaker office. As for the first factor, everything is obvious with it - the coefficients have an inverse dependence on the probability. That is, the more likely the outcome, the lower the coefficient, and vice versa. In the course of the event, the coefficients change. The more likely the outcome of an event will become, the lower the bookmaker's factor.

Another very important factor affecting the formation of coefficients is the margin of the bookmaker office. Margin is the percentage that a bookmaker takes to itself. In other words, it is the net earnings of the BO, which does not depend on the outcome of the event: the player has won or lost. Putting on this or that coefficient, consider that you have already paid a margin to the bookmaker office, since the margin is taken into account in it.

The simplest example to illustrate the notion of margin is a meeting of equal strength opponents. The probability of winning the first team and second one will be divided equally; 50 to 50%. For convenience, in calculations, we translate it into a dimensionless quantity (we denote the probability by the letter W):

W = 50%/100%=0,5

The probability of winning both the first and second teams will be 0.5. We count the coefficient. Mathematically, it is equal to: It is logical that the bookmaker should have set the coefficient 2.0 for this event. What does the bookmaker office do? It introduces margin, say, 5%. These five percent are pawned by the bookmaker in both shoulders (various events), and the probability of outcomes will already be 50% not 55%, or respectively 0.55 and 0.55 in dimensionless units. The coefficient taking into account the margin will be:

Coef = 1/0,55=1,82

The calculation is as follows:

• a bet with a probability of 50%, you must buy with a coefficient of 2;
• a bet with a probability of outcome of 55%, you must buy with a coefficient of 1.82.

But in reality, you bet, the probability of an outcome of which is 50%, to a lower coefficient of 1.82, in which the bookmaker office has already accounted for the margin, in our case 5%.

To sum up, make bets on the most favorable conditions for you. Look for bookmakers that offer the highest odds, and take a low margin, watch the development of the situation in the meeting, as the coefficients have the property to change in the course of the event in either direction, make a correct prediction of the likely outcome of the event and success is assured.