Remove overround margin and make fair prices

The sport of kings.
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azfyazfy
Posts: 74
Joined: Wed Aug 29, 2018 5:12 pm

I copy this example

Horse 1 odds 1.15
Horse 2 odds 5
Horse 3 odds 10
Horse 4 odds 20
Horse 5 odds 50
Horse 6 odds 100
Book margin 125%

Now remove the overround margin
And make fair prices
Horse 1 odds 1.21
Horse 2 odds 9.12
Horse 3 odds 23.63
Horse 4 odds 61.23
Horse 5 odds 215.54
Horse 6 odds 558.47
Book margin 100%

Now I really wanted to know the exact calculation how it's done

Please solve this problem
rik
Posts: 1583
Joined: Sat Jan 25, 2014 5:16 am
Location: London

You would multiply all odds by the overround percentage

say there were 3 horses at evens thats 150% overround

multiply by 1,5 you get the 100% book of odds 3 , 3, 3

That will work the same for your example with more complicated odds

get 1.43, 6,25, 12,5 etc which will add up to 100%

Keep in mind if your trying to get „true odds“ from bookmakers they generally have a much larger margin built in for long shots
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Shaung89
Posts: 181
Joined: Wed Aug 08, 2018 5:39 pm

Also worth noting that bookmakers work on overround 'curves' where (using your example) the 25% isn't evenly distributed accross all runners and is applied based on the 'true' price the algorithm is fed.

In a very competitive race (say a Royal Ascot Handicap) this curve may be very flat where overround spread fairly evenly. However an uncompetitive race with short price favourite(s) and very big outsiders, a skewed curve may be used to apply lots of overround to the shorter price runners (where inevitably the weight of money from the betting public is) yet less margin on the outsiders.

Very crudely outlined below (X-axis price) then 2 curves highlighting how overround may be applied differently depending on the market. Both curves apply the same amount of overround just differently depending on the makeup.
overround curve.png
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deestar
Posts: 178
Joined: Thu Feb 20, 2020 6:17 pm

It might be overkill for your needs but there is quite a lot of academic literature on this. See for a good example
Clarke et al. Adjusting Bookmaker’s Odds to Allow for Overround. American Journal of Sports Science. Vol. 5, No. 6, 2017
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