Step 1: odds to probabilities
The implied probability of a decimal price is 1 ÷ odds. Add up all outcomes of a market. Anything above 100 % is the bookmaker's margin, also called the overround.
Example. A football match at 2.40 / 3.40 / 3.10.
41.67 % + 29.41 % + 32.26 % = 103.34 %. The margin is 3.34 points.
Step 2: the proportional method
The simplest way: divide each implied probability by the total.
| Outcome | Odds | Implied | Fair probability | Fair odds |
|---|---|---|---|---|
| Home | 2.40 | 41.67 % | 40.32 % | 2.48 |
| Draw | 3.40 | 29.41 % | 28.46 % | 3.51 |
| Away | 3.10 | 32.26 % | 31.22 % | 3.20 |
This is easy and good enough for balanced markets. It has one known weakness: it takes the same share off every outcome, while bookmakers tend to load more margin onto long shots. That is called the favourite-longshot bias.
Step 3: the Shin method
The Shin method allows for that bias. It assumes a small share of the money, called z, comes from bettors who know more than the bookmaker, and that long shots are priced to protect against them. With q as the implied probability of an outcome and Σq as the total:
p = ( √( z² + 4 · (1 − z) · q² ÷ Σq ) − z ) ÷ ( 2 · (1 − z) )
You choose z so that the fair probabilities add up to exactly 100 %. A few lines of code find it by trial. The difference shows on uneven markets:
Example. A two-way market at 1.25 / 4.20, a total of 103.81 %.
Proportional: fair odds 1.30 / 4.36. Shin (z = 3.9 %): fair odds 1.28 / 4.57.
A bookmaker offering 4.40 on the long shot looks like value by the first method and not by the second. On a 50 / 50 market both methods give the same result.
Which prices to start from
- A sharp market. Removing the margin from a soft bookmaker only gives you that bookmaker's opinion. Use a low-margin market that accepts winning customers, such as Pinnacle.
- A current price. Fair odds age quickly, in play within seconds.
- A complete market. You need every outcome of the same market at the same moment. Mixing a two-way price including overtime with a three-way price gives nonsense.
Fair odds at Manometer
The network removes the margin from Pinnacle's price with the Shin method by default; proportional and other methods can be chosen on the board. A fair price that is too old is not used. The fair price is the base for value bets and for closing line value.
Next: How to check a tipster's record. Betting is for adults only and can be addictive: responsible betting.