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How to calculate betting commissions

If you’re an active punter you’d be aware that you pay a certain amount of commission every time you place a bet with a betting exchange like Bet365, Betfair, Matchbook and others. Let’s go through the calculations involved in arriving at the corresponding commission amounts before you go ahead and place your bets. Doing so will help you understand if the odds hold any value or not.

Furthermore, gaining a good understanding of betting commission rates and their impact on the betting odds is critical when it comes to betting and trading on betting exchanges like Bet365, Betfair, Matchbook and others. Although the odds offered at a particular betting exchange may seem too good to believe initially, once you calculate the commission charged on every wager, they may not hold that great benefit as you had assumed.

Calculating betting commissions
Let’s assume that you’re being offered odds of 1.98 on a particular betting exchange in a particular Asian handicap market. Conventional bookmakers like Ladbrokes or Bet365 normally offer odds in the vicinity of 1.95 on majority of Asian handicaps. The betting odds of 1.98 being offered to you at your selected betting exchange may seem like holding excellent value at first glance, from that perspective!
However, let’s look into the commission you may get charged at that particular exchange. Let’s assume the commission rate for that particular Asian handicap market has been set at 5% (for that exchange). You decide to bet £ 100 on that market. What do you think your profit will be if you indeed win that bet? You can calculate your profit by multiplying your bet amount with the decimal odds and then subtracting your stake from the resulting figure:
(£ 100 x 1.98) - £ 100 = £ 98

However, what do you think your profit will be once commission has been accounted for? This is calculated as follows:
Commission charged = ((original stake x offered odds) – original stake) x commission rate

Hence, for the above example:
Commission charged = ((£ 100 x 1.98) - £ 100) x 5%
Commission charged = (£ 198 - £ 100) x 5%
Commission charged = £ 98 x 5%
Commission charged = £ 4.9

Hence, your actual profit after deducting the commission amount would be £ 98 - £ 4.9 = £ 93.10

Calculating the actual odds
So, are the odds of 1.98 being offered to you at a particular betting exchange better than 1.95 offered by conventional bookmakers like Bet365? What do you think your actual odds are? Let’s find out.
After you’ve calculated the exact betting exchange commission, you can calculate your actual odds pretty easily. They can be calculated using the following formula:
((original stake x offered odds) - commission amount) / original stake

So, for the example detailed above, actual odds would be calculated as follows:
Actual odds = ((£ 100 x 1.98) - £ 4.9) / £ 100
Actual odds = (£ 198 - £ 4.9) / £ 100
Actual odds = (£ 193.10) / £ 100
Actual odds = 1.9310

So, keeping in mind the 5% commission that you’ll be charged on your every bet, your actual odds for the bet would be 1.9310. If you had placed the same bet with a conventional bookmaker offering you odds of 1.95 (all inclusive), you may have earned a profit of £ 95 as against £ 93.10 in this case. Although it may seem like only a small difference, it can add up to hundreds and sometimes even thousands over the course of several bets.

Hence, even though the odds being offered at a particular betting exchange may seem like very attractive, you must always calculate your actual odds after taking the betting commission into consideration.