Overround Explained & Betting Margin and Payout Calculator (2024)

Overround is the sum total of all the odds on the outcome of a single event. Its purpose is to create a profit margin for t𝔍he bookmakers that ensures they make a profit regardless of the outcome. In this guide, you'll find a payout calculator and which UK bཧookmakers are best for fair payouts.

Explore this page with our Table of Contents

ON THIS PAGE

1. 1 Margin and Payout Calculator
2. 2 Overround, Margin & Payout in Betting Explained
3. 3 Why Does a Bookie Need Overround?
4. 4 How Does a Bookie Achieve Overround?
5. 5 Calculate The Overround, Examples & Shop Around
6. 6 How You Can Use Overround For Arbitrage Betting
7. 7 Hedging With Betting Exchanges Using Overround
8. 8 Other Common Betting Terms
9. 9 ThePuntersPage Final Say
10. 10 Overround Explai✱ned & Betting Margin Calculat꧂or FAQs

Margin and Payout Calculator

INFO

Add prices of events into the ovveround margin calculator to get the overround percentage of the market.

To use the table simply enter your odds, either 🅘decimal, fractional, or American, and the calculator will automatically display the margin and payout so you can get an idea of the value on offer.

Overround, Margin & Payout in Betting Explained

Overround is vital to a bookmaker’s business because it prices markets overwhelmingly in their favour. This is becaus﷽e it is designed to guarantee that the bookmaker𝐆s will still post a profit even if all of the event factors are equal.

Bookmakers, like 🔴all trades, are in business to make money but they also exist because they allow people to enhance their sporting enjoyment. One of the reasons they are able to guarantee themselves a profit or eliminate the threat of making a severe loss is through an event odds overround.

What Is Overround Betting?

When all of the odds of an event are multiplied together there should, because of the pre-factored in margin, be an additional percentage which we call the overround. It is a very important factor within the betting industry and is a very good indicator as to how much value t🌸here is in any specific market. The bigger the overround, the further from the true odds the market in question is likely to be.

What is Payout in Betting Terms?

A payout is the 🔯amount of return a punter will win after a successful wager. This return is made up of all of the winnings a bettors has won, i.e. his or her profit, plus their original stake which is retuned in full. If a player wins on a £10 5/1 wager, then they can expect to win £50 but their payout will be £60 because of the £10 stake that is included in the final return.

Why Does a Bookie Need Overround?

For the most part, the odds offered by UK online bookies are very seldom reflective of the true odds because they will always factor in a margin to cover their overheads. This is essentially their safety net and the lifeblood of their business model. So, when 💦bookmakers are pricing up their odds for an event, they will factor in a margin on top. Then, when they come to add together all of the odds they have drawn u♑p, the final, exaggerated figure will breach 100% and that surplus is what we call the overround which the bookies rely on to stay in business.

How Does a Bookie Achieve Overround?

Overround betting is the lifeblood of any good sportsbook worth its salt but, such is the meaning of overround, it can be applied for anything where chance plays a part. Take th🐓is simple formula for calculating the betting overround for something as basic as a coin toss.

This rounded book, minus the extra margins, does not rely on two or more outcomes having an equal probability as with the above example of the toss of a coin. Eliminating in theory the possib𝕴ility of a tied outcome,꧅ a football match will, in the main, be played out between two teams of uneven ability so we will rate the two teams differently.

So, l🔯et’s s♈ay Team A is a 6/4 shot versus Team B at 4/6.

The implied probabilities are thus:

S🐬o far, w🐼e have not yet added our bookmakers overround.

If £50 was again stak༒ed on each outcome at these odds and Team A wins at 6/4, the bookie’s liability would be £25.

If Team B wins at 4/6, then the bookie’ would make a profit𝓀 of﷽ £16.67.

In the above scenario, the bookie may make a profit of £16.67 or they could also take a hit of £25. The risk of taking such a hit will obviously be unacceptable to a bookmaker, hence the need for the overround. And because of this overround, the bookmaker can ensu𒅌re that, at the very least, they can balance the book andꦰ break even no matter the outcome.

T♐o achieve this, the bookie is therefore required to ta💖ke different amounts of stakes on either side of the market.

In this case, the bookie would have to limit the amount of stakes they take on Team A, relative t▨o Team B in order to balance the book. That would look something like this:

Team A

Team B

So no matter what the outcome here is, the total staked would be £100 and the total liability would be £100 providing the bookmaker with a rounded book that removes the risk and ensures they break even. But bookmakers are not in business to break even. Sure, it’s better than taking a loss but they are in operation to take y🔯our❀ money and turn a regular profit.

That’s where overround comes in. to that end, here’s a simple illustration of how the bookmaker creates and then employs𝔉 the overround.

As we’ve seen, ‘true’ odds require the sum of all possible probabilities to add up to 100%. A straightforward Win/Draw/Win market looks like this with the follo𒊎wing odds and implied probability:

The sum of all three𒅌 implied probabilities is therefore:

30.3% + 30.3% + 45.5% = 106%

Here, you can see that the sum is over the rounded book figure by 6%. Well, this extra 6% is the overround and, as a general rule, anything below 10% is considered a good betting opportunity.

So, using the example above, for every £100 staked on this market, the bookmaker is guaranteed a profit of £6 no matter the outcome. They protect this margin by ensuring that they keep a rounded book by sticking to the appropriate ratio of stakes on each of the three possible outcomes based on the implied probabilities above.

What we have outlined here is a fairly simplistic introduction to the concept of overround. But, remember, bookies do not come to play and, in order to generate their overround figures, they employ complex models and state of the art,꧃ up to𒊎 date technology.

This is when market movement will be triggered, as bookmakers offer more attractive and generally longer odds on the opposing sides of the market in order to tempt more punters in to re-balance the book.

Calculate The Overround, Examples & Shop Around

The betting overround is not always the same. O🐬ur very own overround produced a figure of 6% but that doesn’t mean that all overrounds will be this number. In fact, overround scores can and do vary wildly between different firms and markets. It is also important to note that for multiple selections and accumulators, the overround is compounded by each additional selection. It’s not 6% of the whole, but rather is added for each of the selections individually.

Assuming that the overround of each component selection remains the same 6%, a double bet works out as 6% + 6% = 12%. For a treble, that formula becomes 6% + 6% + 6% = 18%, and so on. Now you can see why bookmakers love accumulators.

It’s also vital to compare prices on different markets, and with them their factored in overround, so that you will be able to see who is publishing closest to the real odds. Consider the following examples of different markets offering differe🐷nt prices with varying levels of overround on essentially the same bet.

You can use the ovꦿerround calculator above in order to help you🎀 with your calculation.

If we break these bets down to calculate the overround, with the help of our odds converter calculator, we see the following:

Overround Example #1: Draw no Bet

Overround Example #2: European Handicap Tennis

In a match between Rafa Nadal and Roger Federer, the bookmaker may offer a price of Evens on Nadal with a European handicap of +3.5 games. If we 🅷add the odds of Nadal + Federer and we cannot have a tie, then that is our onlyꦆ available calculation.

Overround Example #3: Alternative Asian Handicap

As you can see the Draw No Bet market comes with an overround of 8%.

The overround on the Alternative Asian Handicap market is a more favourable 6% in this case. The difference can be seen more clearly however if we compare the potential returns on a £10 wager.

Overround Example #4: Team A – Draw no Bet

Wins if Team A win, returns your stake in the case of a draw and loses if Team B win. £10 staked on Team A DNB at 5/4 returns £22.50, a profit of £12.50.

Overround Example #5: Team A 0.0, Alternative Asian Handicap

Wins if Team A win, returns your stake in the case of a draw and loses if Team B win (i.e. the same bet). This time you’ve staked £10 on Team A 0.0 at odds of 2.30. If this bet wins, your return is £23.00, a profit of £13.00.

So £10 staked on different bets, but with the same outcome, will either return you a profit of £12.50 or £13.00. Only a 50p difference, granted, but that 50p is still 5% of your initial stake and is always better in your pocket rather than the bookies’. Plus, imagine that 5% on all of your stakes. It soon mounts up, so be aware.

How You Can Use Overround For Arbitrage Betting

Arbitrage betting is a gamblers’ technique in which they bet on all of the possible outcomes, however likely or unlikely. It works best with sporting events where there are only two potential outcomes. Because of this, one versus one games where one of the two opponents must win, such as tennis, are particularly well suited to this method. While arbitrage betting is not a new system, the boom in internet gambling and online software has allowed arbitrage betting to grow ever popular much to the annoyance of bookmakers who do not welcome arbitrage betters. One more thing about arbitrag✨e betting is that it is a mathematical process that doesn’t require those employing it to maintain any interest in the sport they're betting on. Generally speaking, arbitrage betting should guarantee a profit but, because it mainly works on two outco𒉰me events and you are backing the loser and the winner, bettors need to place large bets in order to generate any profit or avoid a loss.

Arbitrage Betting Example

Because of the way bookmakers price up their markets using overround, you are guaranteedꦬ to lose money just by betting on each outcome in an event with the same bookmaker. So, when hunting for the possibility for arbitrage, we need to find opportunities where all outcomes from different bookies add up to less than 100%.

To calculate the arbitrage percent𒈔age, you can use the following formula:

Arbitrage % = ((1 / decimal odds for outcome A) x🐓 100) + ((1 / decimal odds fꦿor outcome B) x 100)

Rafa Nadal Win: (1 / 1.18) x 100 = 84.746%

Nick Kyrgios Win: (1 / 7.00) x 100 = 14.286%

84.75% + 14.29% = 99.032%

In the Men’s Tennis exam🐓ple above with two different bookmakers, the formula works out at less than 100% making it ripe f💜or an arbitrage bet.

Hedging With Betting Exchanges Using Overround

Betting exchanges differ from traditional sportsbooks because they allow punters to be the bookmaker and lay bets in a peer to peer platform. With these betting exchanges, you are betting against other people and not a traditional bookmaker or sportsbook. On a betting exchange you can request a higher price than has been published in a sportsbook and so long as someone else lays the bet by agreeing to meet your challenge, your bet will have been matched. On the betting exchanges p𝓡eople can set their own betting odds so we have eliminated the bookie’s ov🦩erround.

For more complex minded bettors, these exchanges also enable arbitrage opportunities, again to cover all possible outcomes and guaranteeing a profit no matter who wins. This risk reducing trading strategy is known as hedging your bets and works as a form෴ of insurance, designed to protect your ✃existing bets against potential losses. Generally speaking, the overround will be lower on peer to peer betting exchanges than it is with the high street or online bookmakers.

That said, betting exchanges make their money by taking a small and fair commission which is worth remembering. For example, betfair’s commi🃏ssion is calculated usin𒅌g a market base rate of 5% and only applied to net winnings, while the commission deducted by Smarkets is 2% on their standard tier and 3% for cusꦛtomers who exceed £25,000 in net profit over the year. For playꦕers that place over 1,500 bets or stakes more than £1 million in a year, a special rate of commission of 1% will be applied.

Hedging Example

To clarify what we mean, let’sꦅ take a look at what would happen if we bet on both players to win the same tennis match. Here’s the market for an upcoming match betwee🔯n the same players from our arbitrage example:

Our main issue is how much we should consider hedging. Our aim should be to work out what would happen if we backed Nadal with half of the potential profi🔴t from winning Kyrgios, £500 should do it. If we put £100 on Kyrgios at his log price as well, we would have a total outlay of £600.

🐎 This would give us a total outlay of $600. We have got £100 on Kyrgios at odds ✅of 11.00 plus £500 on Nadal at 1.50 meaning:

Nadal wins: £750 (£250 total profit)
Ferrer wins: £1,100 (£500 total profit)

Other Common Betting Terms

Timecast bet

To win from behind bet meaning

Dead heat rules

Maximum bet

Correct score tips

Odds payout calculator

Asian handicap explained

Matched betting explained

Double chance meaning

Request a bet

Betting odds explained

ThePuntersPage Final Say

Betting Overround is the tool that the bookmakers use in order to give them a built-in, risk-free profit margin. At the end of the day, while many bettors do not give it a thought, understanding overround calculation and how betting odds work is undeniably beneficial when it comes to making money through betting. Such a dismissive attitude could prove to be foolish because knowing the what, why and how of overround will give you a far greater understandin🥃g of how the odds of your chosen bet compare to the true odds and likelihood of your predicted outcome.