Betting Insight

Over-round

A lot of gambling websites and blogs suggest you can make money on Betting Exchanges simply because you can 'lay' a selection. Afterall, that's what bookmakers' do and you never see a poor bookmaker, right?

Well, yes they do but a vital element is missing called the over-round.

The over-round is the element of underpayment in a set of odds/prices from which a bookmaker makes his profit. In its simplest terms the over-round is the bookmakers in-built profit margin.

For example, if we take an imaginary tennis match in which Murray takes on Davydenko.

Example 1
Murray 4/5
Davydenko 4/5

What do the above odds mean?

- 4/5 as a decimal is 0.8. Now add 1 giving 1.8.
- 100/1.8 = 55.6
- Both players are 4/5 (1.8) so the sum is as follows: 55.6 + 55.6 =111.1
- Now take 111.1 - 100 and you are left with an overround of 11.1
- 11.1 is the over-round
- Dividing 11.1 by 111.1 = a percentage profit of 10%

Given proportionate action on both sides of the book, the bookmaker's profit is £10 per £100 staked, returning £90 per £100 in winnings.

Example 2
Murray 5/4
Davydenko 1/2

What do the above odds mean?

- 5/4 as a decimal is 1.25. Now add 1 giving 2.25. 100/2.25 = 44.4
- 1/2 as a decimal is 0.5. Now add 1 giving 1.5. 100/1.5 = 66.66
- Add 44.4 + 66.66 = 111.1
- Now take 111.1 - 100 and you are left with an overround of 11.1
- 11.1 is the over-round
- Dividing 11.1 by 111.1 = a percentage profit of 10%

Given proportionate action on both sides of the book, the bookmaker's profit is £10 per £100 staked, returning £90 per £100 in winnings.

Example 3 - A fair contest (i.e like tossing a fair coin)
Murray 1/1 (Evens)
Davydenko 1/1 (Evens)

What do the above odds mean?

- 1/1 as a decimal is 1. Now add 1 giving 2. 100/2 = 50
- Now add 50+50 = 100
- In this example there is no over-round and no profit margin for the bookmaker.

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As it's Cheltenham let's find out what the over-round is in the Seasons Holidays Queen Mother Champion Chase,Wednesday 14 March (15:15)

11-8 Well Chief 42.10
100-30 Newmill 23.26
9-2 Voy Por Ustedes 18.18
6-1 Nickname 14.28
12-1 Ashley Brook 7.7
20-1 Dempsey 4.77
28-1 Justified 3.45
40-1 River City 2.44
66-1 Mister McGoldrick 1.5
500-1 Sybellius D'Art 0.2

If we add all the figures in bold type we get 117.88

117.88 - 100 = 17.88

So the over round is 17.88. Dividing (17.88/117.88)*100 = Profit margin of 15.2%, given proportionate action across the book.

An even spread of money for all horses is of course never going to happen. The over-round in the odds however will ensure the bookmaker makes profit in the long run and the punter comes off second best.

When you 'lay' one selection you do not have an in-built profit margin like a bookmaker. And with odds for 'backers' on Betfair approximately 20% better than you can get with a traditional bookmaker you will struggle to 'lay' a contest, whether tennis, a horse race or football match with an in-built over-round and thus profit margin.

The over-round on a Betting Exchange is smaller than a traditional bookmaker but in a liquid markets there will still be an over-round in the book.

Laying, i'm afraid, is not the answer to all your profit making ambitions.

Scott Mowbray
top5bet.com

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