Two-Way vs Three-Way Sports Betting Markets
Why market structure changes implied probabilities, overround calculations and settlement.
A two-way market has two mutually exclusive priced outcomes under its settlement rules; a three-way market has three. You must include every listed outcome when measuring the complete market percentage.
Two-way examples
Many point spreads and totals are priced as two-way markets, subject to push rules.
Three-way examples
Soccer 1X2 markets price home win, draw and away win as distinct outcomes.
Do not omit the draw
Calculating margin from only home and away prices in a three-way market produces a meaningless result.
Push handling
Some two-way markets can push at certain numbers, returning stakes rather than producing a win/loss. Settlement rules belong in the market definition.
Comparisons
Compare equivalent markets with the same overtime, push and settlement treatment.