Overround, also known as vigorish (vig), juice, or margin, is a concept in sports betting that represents the bookmaker’s built-in profit margin on a particular betting market. It is the difference between the implied probability of all possible outcomes in an event and 100%. The overround ensures that the bookmaker always makes a profit, regardless of the outcome of the event.
What is overround betting?
Here’s how overround works:
- Implied Probability: In any betting market, each possible outcome is associated with specific odds. These odds reflect the implied probability of that outcome occurring. Bookmakers set these odds based on various factors, including their assessment of the event’s true probability and their desire to attract balanced betting action on both sides.
- Calculating Overround: To calculate the overround, you convert the odds for each possible outcome into implied probabilities and sum them up. The overround is the percentage by which the sum exceeds 100%. The formula is as follows:
Overround = (Implied Probability of Outcome 1 + Implied Probability of Outcome 2 + … + Implied Probability of Outcome n) – 100%
In this formula, “n” represents the number of possible outcomes in the betting market.
- Profit Margin: The overround represents the bookmaker’s profit margin. A higher overround means a larger profit margin for the bookmaker, while a lower overround means a smaller margin. Bookmakers strive to set odds in a way that ensures a profit, regardless of the outcome of the event.
For example, consider a simple coin toss with two possible outcomes: heads and tails. If a bookmaker offers even odds (2.00 in decimal format) on both outcomes, the overround would be calculated as follows:
- Implied Probability of Heads = 1 / 2.00 = 0.50 (50%)
- Implied Probability of Tails = 1 / 2.00 = 0.50 (50%)
Overround = (0.50 + 0.50) – 100% = 100% – 100% = 0%
In this case, there is no overround, meaning the bookmaker has set the odds in such a way that they are not making a profit regardless of the outcome.
However, in most betting markets, bookmakers will set odds in a way that creates a positive overround, ensuring that they make a profit over the long term. The goal for bettors is to identify opportunities where they believe the bookmaker’s assessment of probabilities is inaccurate, allowing them to find value bets with a positive expected return.