What Margins and Commission Actually Mean

In arbitrage betting, every cent counts. That’s why understanding margins and commission is key.

A bookmaker margin is the built-in edge the book has over you. It’s also called the “vig” or “overround.” Basically, it means the odds are slightly tilted to guarantee the book a profit, no matter the outcome.

Commission, on the other hand, usually pops up on betting exchanges. It’s a cut of your winnings—often 2% to 5%—taken after the bet settles. Unlike margins, it doesn’t change the odds upfront, but it still eats into your final profit.

Knowing how these work helps you avoid false-positive arbs and bad bets.

Where to Tweak Commission Settings in Your Calculator

If you’re using an arbitrage calculator (and you should be), always check where to enter commission.

Look for fields labeled:

  • Exchange commission
  • Bookmaker margin
  • Adjust for vig or overround

Some Calculators hide these behind an “advanced settings” button. Make sure you enter the right % for each side of the bet—especially if one’s a book and the other’s an exchange.

Even a 1% mistake can throw off your arb calculation completely.

The Sneaky Impact of Margin Skew

Not all margins are spread evenly. Some bookmakers stack more margin on one side of a market—usually the favorite. This is called margin skew.

Let’s say Book A has:

  • Team X at 1.60
  • Team Y at 2.80

Even if the total margin looks normal, more edge may be buried in the 1.60 line. If your arbitrage bet is placed on that side, your expected return could shrink fast—even below 0%.

Mini case study: Exchange A offers 2.85 (2% commission). Book B offers 1.60 (5% margin, skewed). The calculator says 0.6% arb—but with the skew and commission combined, your real profit might be closer to 0.1%, or worse, a small loss.

Margins lie. Always dig into how they’re built.

Quick Examples: How Commission Adds Up

Here’s how different commissions stack up in real bets:

  • 2% at Exchange A: You bet $500, win $100 → net $98
  • 5% at Book B: You bet $500, win $100 → net $95

In a tight arb, that $3 difference can mean profit or loss. When both sides of your bet take a cut, it shrinks your edge fast.

Don’t assume low odds mean better value. Always check the fine print.

Avoid Surprises: Confirm Commission First

Some exchanges change their commission based on volume or loyalty tiers. Others adjust by market.

Before betting, double-check:

  • The current commission rate
  • Whether it’s on the win only or full return
  • If it varies by sport or market

Save those numbers in your calculator before you lock in any bet.

Margins and Commission: Your Hidden Opponents

Arbitrage isn’t just you vs. odds. It’s you vs. hidden fees, skewed margins, and silent commissions. Understanding where the book or exchange takes its cut keeps your bets sharp and your edge real.

Even a great arb can fall apart with bad math—don’t let hidden numbers trip you up.