How Bookies Get Their Vig
Let’s say a bookmaker calculates there is 86% chance of a Team A winning and a 14% chance of Team B winning and he wants to set the lines in such a way he keeps more than 2% of the money wagered should he achieve balanced action. These are the steps, by learning them we can also work backwards.
His first step is to likely add around 2.3% to each betting line:
86 X 1.023 = 87.98%
14 X 1.023 = 14.322%
Whereas 86 is (percent chance team wins)
Whereas 14 is (percent chance other team wins)
Whereas 1.023 (derived from 2.3% he wants to earn)
If you enter these two percentages into our odds converter under the implied probability field you’ll see these percentages translate in American odds to -732/+598. Notice the gap is 134.
To show an important lesson let me add a HIGHER amount of vig to a 52/48 probability; in this case I’ll add 3.3% instead of the 2.3% just used. 52*1.033=53.72% 48*1.033= 49.58%, plug these two percentages into our odds converter and see these represent a betting line of -116 / +102.
To make sure this is clear, I’ve just illustrated that moneylines of -732/+598 has far less juice than -116 / +102. The one with less juice has a 134 cent gap in price while the one with more juice has just an 14 cent gap. Do you see now why the idea that +677/-677 is the fair no juice price for -750 / +604 is failed logic? Moneylines cannot be averaged to remove vig. Let me go ahead now and illustrate the proper way to remove vig.
Removing Vig from Moneylines
The first step to remove vig from Patriots -750 / Broncos +604 is to calculate the implied probability for each team. We do this by using the formula risk/return=implied probability (were return is stake + win). So risk for -750: $750 to win $100 returns $850 ($750 stake + $100 win) and the math is 750/850=0.8824 (88.24%). Risk $100 on +604 and the return is $704 ($100 Stake + $604 win) and the math is 100/704=0.1420 (14.20%). Add our two percentages together 88.24%+14.2% and you’ll see these equal 102.44%. The extra 2.44% is the result of bookmaker advantage (vig), to remove it we just need to divide each implied probability by the overall percents market (in this case 102.44%). So 88.24/102.44=86.14% and 14.2/102.44=13.86%, as you can see these now total 100%, so the vig is removed. Plug these no-vig probabilities into our odds converter under the implied probability field and you’ll see the American odds equivalent is -622/+622.
Although this concept is extremely early learning fundamentals, 95% of the betting population assumes -750 / +604 has a fair market price of -677/+677 because that’s the average. You’re now well ahead of most bettors as you understand a bit more how moneylines work, how the bookmaker adds vig, and how you can go about removing it. If you read other articles on our website, including those I already linked to on this page about teasers, derivatives, efficient market, you’re now well on your way to learning profitable sports betting. The good news is you can save a lot of time doing calculations by visiting the no-vig calculator located at the top of this article which does out the math for you.
Using this to become a better sports bettor
As covered in the article on our odds converter page, all betting odds have an associated implied probability. This is just a fancy term for how often a bet needs to win “on average” to “break even”.
For example: If we’re betting at +100 (risk $100 to win $100) the implied probability is 50%. If we’re betting at +200 the implied probability is 33.33%.
The logic why is simple: $100 staked on +200 returns $300 ($100 stake + $200 win), so if we make three bets of $100 @ +200 and 1/3 of the time (33.33% of the time) get back all we staked, then that’s our required win rate to break even.
For reasons that the bookmaker has an advantage, implied probabilities do not tell us how often a team will win, but rather only how often we need for them to win.
If you’d like to be head and shoulders above the starting field on how winning sports betting works, it’s extremely important to understand the betting market. That link I just included covers a brief history about sports betting and explains why PinnacleSports.com (no US players) is the best betting websites for handicapping the market. Once you understand the underlying fundamentals that article addresses, things like profitable teasers, using betting derivatives, and making certain types of proposition wagers all start to come together and make a lot more sense. I suggest reading all those articles I just linked to and then later coming back to this page.
When you understand the betting market is near efficient, the tool I provided on this page has great value. Let’s say Pinnacle Sports who offers the highest betting limits, fastest payouts and lowest margin (-104 on NFL point-spreads) is offering a moneyline of Patriots -750 / Broncos +604. Now let’s say I’m willing to give you Patriots -677 or Broncos +677, your choice, you decide. Which would you take? Many novice bettors would assume it doesn’t matter because 750+604/2=677 so this must be the fair price, and the reason there is a 146 cent gap is the bookmaker advantage. For the later claim, they are correct… the gap is the result of the bookmaker advantage, but -677/+677 is not the fair price for a -750/+604 line. To explain why allow me to illustrate how a bookmaker sets their lines.
Using Recreational Sportsbooks
Here at onlinebetting.com you’ll notice our home page markets many recreational betting websites for reason these are the most ideal websites for the masses. Meanwhile, PinnacleSports.com is no doubt the source for the most efficient betting lines. What I mean by this is… let’s say for an NBA basketball game Pinnacle has a betting line of Knicks +4.5 -102 / Memphis +4.5 -108 we can use the no-vig calculator on this page to determine the market according to Pinnacle is giving Memphis a 50.7% chance of covering -4.5. From here there are all sorts of betting websites such a www.bovada.lv and www.betonline.ag that offer bonuses and promotions. For example at BetOnline you can get a 25% free play on deposits made via western union, and they’ll pick up the fees. It shouldn’t be too difficult from here to work out the math to see if the bonus is +EV when finding many scenarios such as the one I just mentioned.
Meanwhile at Bovada lines are often shaded. New York is a big market and likewise Bovada might be taking many bets on the Knicks and for this reason they’re offering Knicks +4.5 -120 / Memphis +4.5 +100, in this case Memphis might be +EV. Of course, Bovada also deals profiled lines so once you make several advantage bets, they’ll switch you to sharper lines where +EV bets are no longer available. Still though: there many recreational betting sites, Intertops another, and working the angles at many recreational betting sites while handicapping the market is a great way to profit at sports betting over the long term. Note: also understand PinnacleSports does not accept US players but is great resource that many bettors use. These players compare Pinnacle’s lines for the purpose of deciding who to bet at other online betting sites which are friendly to the US market.
Author and Professional: Jim Griffin