Vigorish, also known as vig, juice, the margin, or the house edge, is the amount bookmakers charge for accepting a bet. The fee varies based on the odds, but it is always included, even if its presence isn’t obvious. Gamblers should recognize that the vigorish applies to all wagers and influences the results.
How is the vig implemented in various games and betting types and how to calculate it? Continue reading to find out.
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What is the vig?
Vigorish is part of the odds for all stakes. In sports betting, it’s the commission taken by online sportsbooks to make sure they make money regardless of the game outcomes. Admittedly, it directly affects the potential returns for gamers.
The house edge is also the term for vigorish primarily used in the casino world.
The concept may have different names, though its meaning remains the same in all kinds of gambling. The vigorish composes the bookmaker’s earnings.
For instance, with the even money approach (no vig), where the two teams have 50/50 chances to win, the odds would be +100. This means a $100 bet can bring an equal payout of $100. If bookmakers want to apply a 10% vigorish, they will adjust the odds to -110. In this case, you’ll need to bet $110 to receive a return of 100. The remaining $10 goes to the sportsbook as a fee for their services.
How is vig calculated?
You can utilize the following formula to calculate the vigorish of your stakes:
Vigorish = (Favorite odds/(Favorite odds + 100) x 100) + (100/(Underdog odds + 100) x 100) – 100
Let’s consider the example of NFL preseason odds from bookmaker 22bet to apply this formula for vigorish calculation.
- New York Giants +140
- Miami Dolphins -160
If we paste these numbers into the formula, we’ll get:
(160/(160 + 100) x 100) + (140/(140 + 100) x 100) – 100 = 3.21%
Therefore, the sportsbook’s fee in this case is 3.21% for each wager.
Let’s do the same for odds in decimal format. Let’s say we’re looking at a tennis game where Player A has odds of 1.50 and Player B has odds of 2.75. The implied probabilities would be:
Player A: 1 / 1.50 = 0.6667 or 66.67%
Player B: 1 / 2.75 = 0.3636 or 36.36%
The total of these implied probabilities adds up to more than 100% (66.67% + 36.36%), specifically, it’s at 103.03%. The excess above this magic number, which in this case is at about 3%, represents the Vigorish. The formula for this calculation is: 1/ odds * 100% = probability.
Vig vs. overround
The two concepts have a lot in common but they also carry significant disparities. Overround refers to a way a bookmaker collects the vigorish directly in the betting line.
Overround takes place when the total implied probabilities of all possible outcomes in a betting market surpass 100%. Overround is how the sportsbook collects the vig directly in the betting line. For instance, a betting line with overround may imply that Team A has a 61% chance of triumphing and Team B has a 48% chance. The total implied probability then makes 108%, extending the range of results to a greater extent than it is actually possible.
Correspondingly, sportsbooks can fluctuate the amount of overround to grow or shrink the vigorish they take on a specific betting line.
However, you should remember that the value of overround does not equal the size of the vig. These concepts are interconnected, not interchangeable.
Vig charged on bet types
The vigorish is widely applied in online gambling with various types of bets, such as fixed-odds betting, moneylines, point spreads, and more. Each betting type may dictate a slightly different way of charging the vig.
Let’s overview several popular examples.
Point Spread bets and Totals
I grouped these two betting types in one category because the vig is calculated similarly for both.
In point spread betting, gamblers stake on the margin (spread) of the victory or defeat. The spread is established to even up the playing field between the two teams, like with handicapping.
With totals (over/under), bettors place their wagers on whether the combined score of both teams will be over or under a specified number.
How is the vig calculated in these cases?
The standard vig on spread bets and totals is usually -110 on both sides, meaning you have to bet $110 to win $100. The $10 difference between the bet amount and the return creates the vig.
Here’s an example of how the odds may look.
Point spreads:
- Spread: Team A -7 (-110), Team B +7 (-110).
- Bet $110 on either side to win $100.
- The extra $10 goes to the bookmaker.
Totals:
- Total: Over 45.5 (-110), Under 45.5 (-110).
- Bet $110 on either the over or under to win $100.
- The $10 goes to the sportsbook as a vig.
Parlay
A parlay is a cumulative type of bet, where multiple stakes are united into one. All selections must succeed for the bet to triumph. Parlays bring higher risks, but the payout increases with each additional bet included.
How is the vig calculated in parlays?
Here, the mathematics of bookmaking is more complex, as the vigorish is embedded in the lower payout odds compared to the true mathematical odds. The sportsbook’s margin elevates with the number of selections in the parlay.
Let’s assume that the true odds for a two-team parlay are +300. Then the bookmaker might offer +260, incorporating the vig into the payout. The size of the vigorish will be determined as the difference between implied probabilities of true odds and bookmaker’s odds, which in this case would be around 2.78% (repeating decimal rounded up).
Vigorish in casino games
The concept of vigorish or the house edge is inherent in casino games, such as roulette, blackjack, or video slots.
How can a gambler benefit from understanding the house edge in a casino?
It can be used to identify which games are the most profitable from the gamer’s point of view. Admittedly, games with a higher house edge usually provide a lower return compared to those with a lower edge.
By assessing the vigorish levels in different games, you can make informed choices on how to increase your potential profits.
| Casino Game | House Edge | The House Edge Composition |
| Baccarat | 1.01-15.75% | The edge depends on whether a gambler bets on a banker, a player, or a tie to triumph. |
| Craps | 0-16.67% | The edge is determined by the individual betting possibilities in the game, like pass/don’t pass, come/don’t come, odds, place, and field stakes. |
| American roulette | 5.26% | The edge depends on whether a double 00 pocket is included on the wheel. |
| Video Poker | 0.46% | The edge is affected by paytables and side bets on each poker machine. |
| Slots | 2-15% | The number of paylines and reels in each slot machine determines the edge, as well as the number of paylines selected by a player. |
Final thoughts on the vigorish in sports betting
The vigorish is integral to all gambling activities, including sports betting and casino games. If you seek to minimize your payments to sportsbooks, the house, and a croupier, you should understand the essence of the vig and how it is calculated. This knowledge will empower you to adjust your betting strategy for higher payouts.
