How to Calculate the Bookmaker's Margin

A bookmaker makes money because he creates a market for people who wish to bet on a game or event. Ideally the bookmaker doesn't care who wins because they'll make money no matter the outcome. This money is referred to as the juice, the vig, or the bookmaker's margin. Here's how to calculate it, so you know how much money the bookie is taking off the top.

Instructions

  1. Money Line Juice

    • 1

      Locate the odds of the money line. Money line odds are written in positive and negative numbers. The positive number means the team is an underdog, while the negative number means the team is a favorite. These numbers are always based on winning or betting $100. As an example pretend the money line reads the following for an upcoming football game:

      Bears - 185
      Broncos +165

      In this money line, the Bears are heavily favored to beat the Broncos. This line means that you'd have to be $185 on the Bears to win $100 and for a $100 bet on the Broncos you'd win $165.

    • 2

      Convert the money line to an odds percentage. From the above example you would perform one calculation for each team:

      Bears: Divide 100 by 185 for a result of .540

      Broncos: Divide 100 into 165 for a result of .606

    • 3

      Add those two decimals together to get an answer. In the example equation that would garner an answer of 1.146. Round that last decimal off and the answer would be 1.15. Your answer is 15 percent because that's what .15 stands for when it is converted to percentages.

    Point Spread Margin

    • 4

      Read the point spread betting line. Because a point spread is an attempt by the bookmaker to make the bet fair by giving or receiving points to one team, the lines will most likely both read in negative numbers.

    • 5

      Drop the negative numbers. As an example, say the point spread line is the following.

      (-120) Bears -7 over the (-120) Broncos

      This means that that the Bears must win by 7 in order for you to win the bet if you take the Bears, or the Broncos must lose by less than 7 for you to take the bet if you choose the Broncos. The (-120) represents the amount of money you must bet in order to win $100. The winner will receive their initial stake of $100, plus the $120 in winnings.

    • 6

      Add the amounts of money together. Add the 120 together for both teams. This ia done because either way the book maker will collect $120 from one side of the bet, and $120 from the other. The booker maker now has $240.

    • 7

      Remove the payout from the book maker. At the end of the game, the bookmaker will pay someone $220 leaving them with $20. (The extra 20 is because the winning better gets his original bet back plus the $10 from the -120 line. Therefore the margin that the bookmaker made was 20/240 or 8.33 percent.