When you place a bet at a sportsbook, the operator is going to make a profit. How do we know that for certain?
It’s thanks to what’s known as vigorish, which is the fee charged by the book for facilitating the bet. You can think of it in similar terms to a commission you would pay on a transaction, or the mark-up charged by retail outlets on products they sell.
Sportsbooks are for-profit entities and in the business of making money. Since there are simply no guarantees as to what the end result of a sporting contest will be, the vigorish helps to insure they are covered regardless of the outcome.
We’re going to take a closer look at the concept of vigorish right here, including how it’s calculated and what it means for your overall bottom line. Here’s what you need to know before you bet on sports in Colorado.
What is vig (or vigorish)?
If you place a bet at standard odds of -110, the return you see will be less than your original wager amount. For example, if you place a $1 bet at those odds and go on to win, you’ll get back a grand total of $1.91: your initial stake plus a profit of $0.91.
Instead of doubling your money, you’ve received a 91% return. That’s not bad for a day’s work. So where does the other 9% go?
That’s the fee that the sportsbook keeps for itself for offering the bet. Known as vigorish or juice, this is how sportsbook operators make their money regardless of the outcome.
Let’s consider a random game in which the odds on both sides of the equation are set at -110. It appears to be a toss-up, so the book has attracted nearly even action on both sides.
At the end of the day, one side will win while the other will lose. For sportsbooks, no matter what happens, they know they are keeping a portion of the pool.
The winning side will be paid out, while the losing tickets will move on to play another day. For a sportsbook, the hope is that what they pay out will be less than the amount they get to keep.
Vigorish is essentially a built-in cushion to ensure that happens. For many casual bettors, they simply look past it and call it a day. If they win more than they lose, they’re happy campers.
Seasoned bettors look at vigorish differently. They know that it needs to be factored into the equation. To profit on a long-term basis, they need to “beat the vig.”
For bettors to break even when betting at odds of -110, they need to win about 52.4% of their bets when the vig is factored in.
How to calculate vig
For standard odds of -110, the math has been done thousands of times over. The vig — or juice or amount kept by the sportsbook — is 4.54% at these odds.
Here’s another way to think it through.
When you see odds of -110, that can also be interpreted to mean that you have to bet $11 in order to see a return of $10. If the odds were exactly the same on both sides of the equation, the two bettors would be betting a total of $22.
The winning side will get back a total of $21 — the initial stake of $11 plus a profit of $10. The extra dollar has been kept by the sportsbook as vigorish. If we divide the $1 vig by the total amount wagered of $22, we come out with 4.54%.
Of course, both sides of the betting equation are not always equal, so calculating the actual vig isn’t as clear cut. For those who like to do it themselves, there is a formula that helps you figure it out.
Vig = 100 * (1 – p * q/p + q)
In the above formula, p and q represent the decimal payout for each outcome of the bet. Yep, that means you would have to convert the odds to decimal form to figure it out.
That’s an entirely different kettle of fish. Thankfully, there are a number of helpful calculators on the internet that can help you figure out the vig in an instant without racking your brain.
Is the vig the same for all bet types?
While it would be great if the answer to that question was a simple “yes,” the reality is different. The vig will vary based on the bet type. For spreads and totals, the vig will fall into the range used for our example above.
However, it will vary based on the actual odds, which can fluctuate based on market action, book standards or other tweaks implemented. For moneyline, the vig will vary dramatically based on the listed odds.
Let’s take a look at the details for each of the three main bet types.
Vig on point spread
For most sportsbooks, the standard odds listing for point spread bets is -110. Upon the initial release of lines, both the underdog and favorite side of the bet will be listed at those odds.
After bets begin to come in, it’s not uncommon to see movement in one direction or the other based on the action. For example, if lots of money comes in on the favorite side, the odds may be adjusted to -115 on that side and to -105 on the other.
This is done in a bid to even out the action as much as possible. Sportsbooks aren’t in the business of exposing themselves to liability, so the goal is to keep it as even as possible on both sides.
Naturally, that’s not always the case. One side of a bet can get hammered with action regardless of line moves. That’ll open up the sportsbook to potential losses, but the public isn’t always right, either.
At the end of the day, the goal is for the sportsbooks to pay out less than they take in. Vigorish helps to ensure the scale is tilted further in their favor.
While -110 odds are considered the norm for the industry, there are operators out there who will offer odds of -105 for point spread bets either on a promotional or ongoing basis.
That may not seem like a huge difference, but it can absolutely add up for any bettor who wagers a decent level of volume. Consider the potential return for a successful $100 bet at both price points.
- Odds of -110: $90.90 profit
- Odds of -105: $95.20 profit
For a single $100 bet, the difference is only $4.30. While that may not seem like much, multiply that difference for 100 correct wagers, and you’re looking at $430. That’s far from chump change. Ticks of difference in the favor of bettors can make a huge difference for the bottom line.
Vig on totals
The vig for totals — also known as over/unders — is basically the same as for point spread bets. The standard odds are -110, but some operators may deviate slightly.
The odds for totals wagers will also move based on market action. One side could rise up to -112 or even -115, while a side that’s not seeing much action could hit -108 or -105.
For experienced bettors, finding the most attractive price is part of the game. New bettors can get in on this as well by partaking in what’s known as “line shopping.”
This simply means that you’re comparing the odds at multiple operators in a bid to find the most attractive prices. Many moons ago, this wasn’t an easy trick to turn, but it’s much simpler these days.
The odds and lines from legal sportsbooks in Colorado are easily accessible, so comparing offerings takes just a couple of minutes.
That can add up to time very well spent. As mentioned, the seemingly minor ticks of difference can add up to a lot over the course of a sports season or betting year. Consider the returns for successful $100 wagers at the following odds.
- Odds of +100: $100 profit
- Odds of -105: $95.20 profit
- Odds of -110: $90.90 profit
- Odds of -115: $87.00 profit
- Odds of -120: $83.30 profit
The vig charged by sportsbooks eats into potential profits, but bettors can help mitigate the damage by seeking out the best prices.
Moneyline and the vig
Odds on the moneyline can be all over the map, so the vig can be tougher to discern. However, you can rest assured that it’s built into the equation.
Payouts on winning bets on the favorite side will drop right along with the odds, but they’ll increase on underdogs as the odds rise. At the end of the day, the sportsbook operator has some wiggle room built into the equation in the form of a vig.
For games that appear to be tight between two evenly matched squads, you may see odds offered in the range of -110, such as one side at -105 and the other at -115.
However, many matchups are listed with clear favorites and underdogs. The favorite side could fall in the range of anywhere from -105 to astronomical levels depending on the sport, such as -250 or -400.
On the underdog side, it’s a similar story. Dogs that aren’t that far behind their competitors could be listed at +100, while serious long shots could be listed at exorbitant odds such as +500.
Line shopping is important for both spreads and totals, but it becomes even more imperative when it comes to the moneyline. Odds at sportsbooks aren’t always created equal, so a little shopping around can do wonders.
For a quick example, consider a game with a clear-cut favorite that’s listed at -155 on that side and +135 for the dog. If you shop around a bit, you could find that another operator has the same game listed at a split of -140/+120.
Just like that, you’ve increased your profit potential for a game you planned on betting on. For further perspective on how much of a difference this can make, consider the payouts on winning $100 bets at the following odds on the favored side.
- Odds of -125: $80 profit
- Odds of -150: $66.70 profit
- Odds of -175: $57.10 profit
- Odds of -200: $50.00 profit
Let’s look at the same on the underdog side.
- Odds of +125: $125 profit
- Odds of +150: $150 profit
- Odds of +175: $175 profit
- Odds of +200: $200 profit
When looking to place a bet, always factor the potential payout into your line of thinking. Each tick of difference on the odds board can have a direct impact on your overall bottom line.
The vig for other bet types
Just like with moneyline betting, the vig charged by books on other bet types isn’t as clear cut as it is with spreads and totals. However, you can remain assured that it’s there.
We’ll walk through how to calculate the vig in a sec. For now, let’s consider the example of a prop bet with a range of five choices. Typically, the book will consider one outcome to be more likely than the others, and so on.
That’ll result in a range of odds that looks something like this, listed with the payouts offered for a successful $20 wager.
- Odds of -115: $17.40 profit
- Odds of +100: $20 profit
- Odds of +120: $24 profit
- Odds of +150: $30 profit
- Odds of +180: $36 profit
The less likely something is to happen, the more of a bounty will be paid by sportsbooks. Underdogs are going to come in here and there, and that’ll place the book on the hook for some big payouts.
However, remember that sportsbooks are also taking in plenty of action elsewhere, and not all of it is successful. When you add in the vig, the book is designed to come out ahead.
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What vigorish means for your bottom line
You can win more bets than you lose and still come out behind. How is that possible? That’s due to the juice, which needs to be factored into your thought process to achieve the goal of long-term profitability.
If you’re placing all of your bets at odds of -110, you’ll need to win 52.4% of your bets just to break even. Naturally, not all bets are placed at that price point. As the odds you are betting at deviate, so too will the break-even percentage.
However, it’s safe to use this as a benchmark for spread and totals bets. When it comes to moneyline and other bet types, it’s going to vary.
In all cases, tracking your bets over a range of time will provide you with your ultimate bottom line. While that can be time-consuming, it’s a valuable step to take on the path to long-term profitability.