Bookmakers over-round

It is common for punters and bookmakers to express sports betting odds in terms of chances or probabilities of the horse winning. This is achieved by converting the betting odds to a %chance as shown in Table 1.

In a fictional horse race of four runners, where each horse has an equal chance of winning, the true betting odds will be 3/1 [see Table 2 race 1].

bookmakers overround

A £1 stake on each runner at 3/1 will leave the punter "all square" - no matter what the result. Each horse has a 1 in 4 (or 25%) chance of winning. The sum of the chances for each horse winning the race is 100%.

In reality, the bookmaker includes a race over-round, so the sum of the individual %chances of each horses is > 100%. Now the betting odds are in the bookmakers favor and the punter will no longer be "all square" if all horses are backed. The amount > 100% is the degree to which the betting odds are in favor of the bookmaker [see Table 2 race 2].

Bookmaking is founded on the principle that the betting book has an over round and that the bookmaker will make a profit no matter what the result. The successful punter will follow horses when the betting odds are in their favor. i.e. the true %chance of the horse winning the race are greater than those being offered by bookmakers.
N.B. Typical over-round is 2% per runner. So a 4 runner race could be expected to be 108%.

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