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What is the House Edge?

what is the house edge

House Edge or Sportsbook rake or margin is the percentage that the betting company calculates as its own profit when producing the odds for each sporting event (football, basketball, tennis, etc.).

That is, in every 1-X-2 odds, the bookmaker has foreseen the house winnings, regardless of the market that the bettor chooses. This is why bettors look out for betting markets where the sportsbook rake is as little as possible, because this money is in favour of the bookmaker and are being deducted from the total betting odds. This means that the bigger the rake is, the lower the bettor’s profits are!

The house edge does not stand out for a bettor to see as straightforward, as it happens with the betting markets themselves. However, there are mathematical formulas that can help calculate it for each betting market, as the one that follows.

House Edge Formula

The House Edge (Y) is calculated by the following equations:

  • (100 / Home Win odds) + (100 / Draw odds) + (100 / Away Win odds) = Y
  • Y – 100% = House Edge

Example with real odds

Suppose we have the following set of odds (1) 2.75 – (X) 3.00 – (2) 2.30

According to the type mentioned above we have:

(100 / 2.75) + (100 / 3.00) + (100 / 2.30) = 36.3 + 33.3 + 43.4 = 113

Thus, House Edge is 113 – 100 = 13%

Conclusion

In this example, 13% is the percentage of the bookmaker’s profit, independently of the outcome result of the event. In simple terms, what you need to know is that the smaller the house edge of the betting company you choose to bet your money on, the better are the odds for you, as well as the potential winnings.

It is very important to know that the ideal house edge ranges between 4% and 6% for major and commercial leagues and from 7% to 10% for lesser known leagues.

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