How to Calculate the Payout Ratio – Easy with Formula or Payout Ratio Calculator
The payout ratio is a key factor in understanding a bookmaker’s margin and your true chances of winning – you can read more about the relationship between probability and betting odds in our basics article. Here we’ll show you step by step how to calculate the payout ratio yourself – or alternatively use the Payout Ratio Calculator further down, which delivers the result automatically.
Why Calculate the Payout Ratio?
The payout ratio, also known as the payback percentage, indicates what percentage of stakes is returned to bettors as winnings on average. A high payout ratio means better conditions for you, while a low one secures a larger margin for the bookmaker. With the right method you can calculate the payout ratio yourself and find the provider with the fairest odds.
Calculating the Payout Ratio – The Formula
Payout Ratio = 100 / (1 / Odds Home Win + 1 / Odds Draw + 1 / Odds Away Win)
For a 2-way market (e.g. Over/Under), the third term is simply omitted.
Example: Calculating the Payout Ratio
Let’s take a football match as an example with the following odds:
- Win Germany: 1.21
- Draw: 8.00
- Win Czech Republic: 15.00
Step-by-Step Guide:
- Calculate the reciprocals of the odds:
1 / 1.21 = 0.8264 1 / 8.00 = 0.1250 1 / 15.00 = 0.0667
- Add up the values:
0.8264 + 0.1250 + 0.0667 = 1.0181
- Divide 100 by the sum:
Payout Ratio = 100 / 1.0181 = 98.22%
For this bookmaker, 98.22% of all stakes are returned to bettors as winnings on average – the remaining 1.78% is the bookmaker’s margin. The closer the payout ratio is to 100%, the fairer the odds.
Payout Ratio Calculator: Quick Help for Your Bets
If you’d rather skip the manual calculation, simply use the Payout Ratio Calculator further down this page: enter the odds, click “Calculate” – done. It works for both 2-way and 3-way markets and also directly gives you the implied probability of each individual odd.
Whether you calculate it yourself or use the calculator is a matter of preference – both methods lead to the identical result. The manual calculation helps you understand the logic behind it, while the calculator is ideal for quick comparisons between multiple bookmakers.
Conclusion: Calculating the Payout Ratio Made Easy
Calculating the payout ratio is no witchcraft with the right formula – and it’s even faster with the calculator. Use this method to spot fair odds and specifically find the provider with the best payout ratio for your bet when comparing bookmakers.