Value betting masterclass · Module 1: The foundations · Lesson 3 of 25 · About 6 min
Fair odds are the prices a market would show once the bookmaker’s margin is removed. They are an estimate of the true chance of each outcome, written as odds, and once you have them you can tell whether the best price available is longer than it should be.
This guide shows how to take the margin out of a two-way and a three-way market, then how to compare the result with the best price you can find.
Read the transcript
Every price you see has the bookmaker's margin built in. Here's how to take it out and find the fair odds underneath.
Take a football match. Home is two point one, the draw is three point four, and away is three point six. As percentages, that's forty-seven point six, twenty-nine point four and twenty-seven point eight.
Add them up and you get one hundred and four point eight per cent. The extra four point eight is the margin the bookmaker keeps.
To remove it, divide each percentage by that total. Home drops to forty-five point four, the draw to twenty-eight point one, and away to twenty-six point five. Now they add up to exactly one hundred.
Turn those back into odds and you have the fair prices. Roughly two point two for home, three point five six for the draw, and three point seven seven for away.
So using fair odds takes three steps. First, convert every price to a percentage. Second, divide each one by the market total. Third, look for bookmaker prices above the fair odds, because that's a bet worth a closer look.
The free fair odds calculator on ValueBets.uk does these sums for you. Please bet responsibly.
Key points
- Turn each price into an implied probability and add them together.
- Divide each probability by that total, so the results add up to 100%.
- 1 ÷ each new probability gives you the fair odds.
- A best price above the fair price points to value on paper, but it is still an estimate.
Why fair odds matter
Every bookmaker builds a margin into its prices, so the implied chances in a market always add up to more than 100%. The raw odds therefore overstate how likely each outcome is, and you can’t use them as they are. Our bookmaker margin explained guide shows how big that margin tends to be.
Removing it gives you a cleaner benchmark, and that benchmark is the heart of value betting (Lesson 1 out of 25 in the Masterclass): you need a fair price before you can recognise a generous one. If you want a refresher on the first step, read our guide to turning odds into percentages (Lesson 2 out of 25 in the Masterclass).
Fair odds in a two-way market
A two-way market has two outcomes, such as both teams to score yes or no. Here is the proportional method, one step at a time.
Worked example
Both teams to score in Crystal Palace v Brentford is 1.75 for yes and 2.10 for no.
- Yes: 1 ÷ 1.75 = 57.14%. No: 1 ÷ 2.10 = 47.62%.
- Total: 57.14% + 47.62% = 104.76%, so the margin is 4.76%.
- Yes: 57.14 ÷ 104.76 = 54.55%. No: 47.62 ÷ 104.76 = 45.45%.
- Fair odds: yes 1 ÷ 0.5455 = 1.83, no 1 ÷ 0.4545 = 2.20.
Both fair prices are a little longer than the quoted ones, because the margin has been given back, and the fair chances now total exactly 100%. The same steps work for any two-way market, as our worked example on BTTS odds shows. Combine bets in an acca and the margin on each leg multiplies, which our accumulator margin guide explains.
Fair odds in a three-way market
A football match result, or 1X2 market, has three outcomes: home, draw and away. The method is identical, but there are more numbers to track, so a table helps.
Worked example
Wolves v Leeds is priced 2.60 home, 3.30 draw and 2.80 away (prices for illustration only). Together they come to 104.47%.
| Outcome | Odds | Implied % | Scaled % | Fair odds |
|---|---|---|---|---|
| Home | 2.60 | 38.46% | 36.82% | 2.72 |
| Draw | 3.30 | 30.30% | 29.00% | 3.45 |
| Away | 2.80 | 35.71% | 34.18% | 2.93 |
| Total | 104.47% | 100.00% |
Each scaled figure is the implied percentage divided by 1.0447, and each fair price is 1 ÷ the scaled figure.
The calculator below does this for any two-way or three-way market. Enter the prices and it shows the margin and the fair odds.
Fair odds and margin calculator
Other ways to remove the margin
The proportional method is simple, which makes it a good starting point. It does assume the margin is shared evenly across every outcome, though, and that isn’t always the case.
Research on the favourite-longshot bias suggests outsiders are often priced shorter than their true chance, which means more of the margin sits on them. Alternatives such as the power method, the log method and Shin’s method try to allow for this. Compared with the proportional method, they usually give the favourite a slightly higher fair chance and the outsider a slightly lower one.
In most markets the gap between methods is small, often just a few hundredths on the fair price, but it can matter more for big outsiders. For a clear technical comparison, the vignette for the implied R package sets the methods side by side.
Comparing fair odds with the best price
With a fair price in hand, look for the best price at any bookmaker. Divide the best price by the fair price and take away 1 to get a rough edge.
Worked example
From the table, the fair price for a Wolves win is 2.72, and the best price you can find is 2.85.
2.85 ÷ 2.72 − 1 = 0.048, an edge of about 4.8% on paper. A best price of 2.65, by contrast, sits below fair and has a negative edge.
A few cautions. Your fair price is only as good as the market you started from, which is why a sharp, busy market makes a better benchmark than one soft bookmaker. Small edges can disappear if your inputs are slightly off, so double-check them, and run the sums through our expected value guide (Lesson 4 out of 25 in the Masterclass). Shopping around helps too, as our odds shopping (Lesson 6 out of 25 in the Masterclass) page explains.
And remember that a positive edge on paper never promises a profit.
Related guides
- Bookmaker margin explained
- Implied probability explained (Lesson 2 out of 25 in the Masterclass)
- Using exchange prices as a benchmark (Lesson 8 out of 25 in the Masterclass)
- Sharp bookmakers (Lesson 7 out of 25 in the Masterclass)
- Value betting explained (Lesson 1 out of 25 in the Masterclass)
Lesson 3 of 25 · The foundations
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