betshah: How to calculate commission-free odds

Unlike traditional bookmakers, exchanges levy a commission based on the net market profit, typically around 5% but often rising to 6% or 7% in various regions.

Consider Betshah‘s moneyline for Swansea triumphing over Crystal Palace at 1.84, while the same odds on the betting exchange stand at 1.86. Now, you may wonder: is the exchange’s 1.86, post-commission, more advantageous than Pinnacle’s commission-free 1.84?

Decimal odds represent an inverse of the probability of an event occurring (for instance, if the likelihood of a coin landing heads is 50% or 0.5, the corresponding odds are 1/0.50 = 2.00) rather than a ratio between potential reward and stake. For instance, a £100 wager at odds of 1.86 could yield a £186 return, encompassing the initial £100 stake and a net profit of £86.

As elucidated, betting exchanges impose commissions based on net market profits. Hence, in the above scenario, you would retrieve the £100 stake in full, but the commission would be deducted from the £86 net profit.

Suppose you reside in a jurisdiction unaffected by commission hikes, yet you haven’t amassed adequate points for a commission discount. In such a case, a betting exchange like Betfair would exact a 5% commission on your winnings, equating to 0.05 * £86 = £4.3, leaving you with £81.70.

In essence, a £100 bet would yield £81.70 in winnings, thereby resulting in actual odds of 1.817—3% lower than Betshah’s odds.

Now equipped with the means to calculate net odds after commission, consider the following formula: Actual odds = 1 + (1 – COMM/100) * (ODDS – 1).

While exchanges serve as a potent tool in bettors’ arsenal, the deductions applied post-bet placement often lead to misconceptions regarding the value received. Armed with the mathematical tools, the choice of where to bet ultimately lies with you, yet discerning bettors may lean towards Pinnacle.