Understanding How Betting Odds Work: Vigorish Explained
By Loot, Professional Sports Handicapper, Lootmeister.com
To explain what “vigorish” is, it helps to understand how bookies and the sportsbooks operate. Sports betting is in fact a unique form of gambling. But it is gambling. And in any form of gambling, the “house” always has a mathematic edge. In sports betting, that’s no different. You have to do a little better than what the mathematics would suggest in order to make a profit. In other words, picking games at 50% doesn’t mean you’re even, it means you’re losing.
That’s due to vigorish, also known as “juice,” which is basically a bookie tax--the cost you pay for getting the privilege to bet on sports. Breaking even won’t cut it because we never quite receive payouts in sports betting that exactly reflect the true odds. That’s how the house thrives in every form of gambling. Take roulette as an example. There are 38 slots on the wheel, but when you hit your number, you only get paid 35-to-1. Over time, there’s no way the house can lose when always paying out less than what the true probabilities suggest.
The bad news is that sports betting is subject to the same dynamic that allows the house to always win in other forms of gaming. The good news is that the level is not quite as steep as it is in other forms of gaming. In terms of getting the most bang for your buck, sports betting ranks right up there. In addition, you can buck the odds with superior analysis and selections. Other than poker and horse racing, sports betting is the only accepted form of gaming where superior decision-making can at least theoretically trump the house-edge.
Let’s look at how vigorish is applied to sports bets:
When betting on football and basketball, both at the college and pro levels, the standard form of wagering takes place with a point spread. The point spread is used to lend equal betting appeal to both sides of the bet. When betting against-the-spread, both sides of the bet generally pay the same. It just doesn’t pay as much as you bet.
The industry-standard for against-the-spread wagers is a -110 line, meaning for every $100 you want to win, you have to wager $110. In other words, if you want to win $20, you need to bet $22. When all bettors are paying that vigorish, it’s not hard to see how the book makes money. When betting $110 for every $100 you want to win, you have to do better than 50% to come out ahead and not everyone can do that.
It’s incumbent on the bettor to seek out the best value for their against-the-spread bets. While -110 is the customary betting line at most sportsbooks on land and online, you can find a -105 line, which means you will only be betting $105 for every $100 you want to win. Cutting the vigorish in half is a valuable asset to have in your repertoire. The the best sportsbook that offers reduced vig sports betting is 5Dimes.
The Money Line
All sports offer some variation of money line wagering. You can bet on football and basketball teams to simply win the game, which would be a money line bet. Sports like baseball, boxing, MMA, tennis, soccer, and hockey use the money line when you pick a winner. The money line is essentially a way to express odds. Let’s see how the vigorish works with money lines:
Toronto Blue Jays +115 vs. Detroit Tigers -135
Above you see a money line for a baseball bet. If there were no vigorish, both sides of the bet would equal out. But you see Detroit is -135, with Toronto at +115. Let’s say Toronto wins the game. For every $100 bet, the book has to pay off $115. But they were accepting Detroit bets where bettors had to risk $135 to win $100. If Toronto was +135, the book wouldn’t be making any money, assuming there was an even spread of bets placed on both teams.
Bookies apply vigorish to parlays by not offering payouts that fairly represent the true odds of winning the wager. And the juice is appreciably steeper than it is for straight bets where you’re picking one team. Mathematics indicates that the odds that you will pick 2 games correctly ATS without missing is 3-to-1, but a 2-team parlay only pays 2.6-to-1. Picking 3 games correctly without missing is 7-to-1, but the parlay only pays 6-to-1. And it only gets worse from there with the more teams you pick. The best parlay odds on the web can be found at Sportbet (Select the "Super Saver Bonus" when signing up to get the increased parlay payouts).
Parlays are not unique in this area. There is a list of more exotic bets, with the list growing seemingly every year. And they all offer payouts that aren’t a fair representation of what the true odds would indicate. And the more convoluted the wager, the better the chance that the vigorish is steeper.
It would be nice if sportsbooks operated purely out of the goodness of their hearts, but alas, they are in this to make money. It’s incumbent upon bettors to negotiate this dynamic and understand the playing field, namely how the deck is stacked against them and what they need to do to counteract that.
Some of those things are easy, like finding a book that offers reduced vigorish, enhanced payouts, or at least periods throughout the week where you can get a break on the vig. But to really stand a chance against the bookie requires a certain level of handicapping excellence, selectivity, and the ability to not let the gambling aspect of it get the best of you. Vigorish is only one of many reasons why the vast majority of bettors are losers over the long-haul. It’s far from being the sole culprit.