Unlocking Vigorish: A Comprehensive Guide to Sportsbook Profit Margins


Vig or overround explained

Overround, juice, or vigorish (commonly known as vig) represents the built-in profit margin for a sportsbook on a given betting market.

It’s essentially the commission or fee charged by the bookmaker for facilitating the bet.

The odds offered by the sportsbook are adjusted to ensure that, regardless of the outcome of an event, the sportsbook makes a profit.

Calculating the Overround

The overround is calculated by converting the decimal odds for each outcome in a market into implied probabilities and then summing them up.

The total will typically be greater than 100%, representing the bookmaker’s profit margin. For example, let’s say a bookmaker offers the following odds on a tennis match:

  • Player A: 1.80
  • Player B: 2.00 To calculate the overround:
  • Convert the odds to implied probabilities:
    • Player A: 1/1.80 = 0.5556 (or 55.56%)
    • Player B: 1/2.00 = 0.5000 (or 50.00%)
  • Sum up the probabilities: 55.56% + 50.00% = 105.56% The overround in this case is 105.56%, indicating a 5.56% profit margin for the sportsbook.

Determining the Vigorish

The vigorish is essentially the percentage of the overround. In the above example, the vigorish would be 5.56%. Vigorish = (Overround – 100%)

Impact on Payouts

The overround directly affects the potential payouts for bettors. Since the total implied probabilities exceed 100%, the actual probability of any outcome occurring is lower than what the odds suggest.

This ensures that, on average, the sportsbook makes a profit over a large number of bets.

  • To calculate the implied probabilities for each outcome:
    • Implied Probability = 1 / Decimal Odds
  • To calculate the payout for a winning bet:
    • Payout = (Stake * Decimal Odds) – Stake

Management by Bookmakers

Bookmakers adjust their odds to manage the overround. They may shift odds based on betting patterns, news, or other factors to balance their books and mitigate their risk exposure.

Overall, understanding overround, juice, or vigorish is essential for bettors to make informed decisions about their bets and to recognize the inherent advantage the sportsbook holds in every market.

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