How to Calculate Betting Commission

If you bet using a betting exchange, you may have noticed that your total winnings are less than you should have won when calculated using the odds of your selection when placing the bet.

However, it’s important for everyone to understand that betting exchanges charge commission.

Here, in our guide to betting commission at the betting exchange, we will explain what commission is and how to calculate it to ensure you are getting the correct value on your bets.

How is Betting Commission Calculated?

Anyone who has studied betting odds and how they are worked out will know that bookmakers add a margin when creating betting odds, to ensure they make a profit.

This means that instead of setting odds using a fair market of 100%, where it would be even money for both selections in an event with two participants, they will add a margin to this and calculate the odds at say 105%.

Betting exchanges are different because they do not calculate the odds with a margin. Instead, they take a commission from the bets you place. This means the odds on offer do not represent how much you will actually win.

For example, lets say you placed a £100 bet on a 2/1 shot and it won. You would expect to receive a payout of £300, £200 profit and your £100 stake money back offers bookmakers. But, you placed the bet with a betting exchange that charges 5% commission. So instead of making £200 profit, you will actually only make £190 profit because 5% has been deducted.

Meaning your total winnings changes from £300 to £290.

It doesn’t sound a lot on one bet. But, if you are continuously being deducted 5%, the value of your bets will soon drop and the amount of commission paid will rise. Also, the above example is just calculating the commission on profit.

Using calculations for an exchange who only charge commission on profit, we can give you another example and show you how commission is calculated.

We will use a bet with a £100 stake placed on a selection priced at odds of 1.85.

To work out the actual payout and profit from this bet, we must calculate how much the payout would be using the given odds, then minus the stake to find the profit from this.

We then calculate the amount of commission to be paid, and can then take that away from the original profit to get an actual profit.

• Stake x Odds = Winnings
• Winnings – Stake = Profit
• (Profit / 100) x Commission Percentage = Amount of Commission

So, using the odds and stake given above, we get:

• 100 x 1.85 = 185
• 185 – 100 = 85
• (85 / 100) x 5 = 4.25

So, as you can see, the total commission on this bet would be £4.25. To work out your actual profit, you must take the original profit of 85 and minus the 4.25.

• 85 – 4.25 = 80.75

Your actual profit from this bet would be £80.75 instead of the £85 the betting odds indicated it would be, meaning your total payout is £180.75 instead of £185.

These calculations can be used with any size stake, at any odds, and using whatever percentage the betting exchange charges.

Calculating True Betting Odds

You may look at the odds available on a betting exchange and believe you are getting better odds than those being given at the online bookmaker you usually use. But, you must first work out the true odds on offer at the exchange before deciding if they are indeed better value.

Using the odds and the actual profit shown in the example above, we can translate that into true odds on offer at the exchange.

So, having worked out our actual winnings we can then turn this into betting odds by:

• 180.75 / 100 = 1.8075

If we place a bet on a selection priced at 1.85, we are actually getting true odds of 1.8075.

Obviously, the amount of commission paid will increase on bets placed at longer odds and that is where you will find that sticking with a traditional bookmaker offers more value.

For instance, placing a bet at odds of 8/1 or 9.00 would usually return £900 from a £100 stake. This is a profit of £800. But, taking a 5% commission away gives you an actual profit of £760 and an actual payout of £860. Meaning your true odds are 8.6 instead of 9.00.