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General Sports Betting Articles
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What Vigorish Is
Vigorish is the term that describes the fee bookmakers charge to book a wager. The vigorish is similar to a transaction fee a stock broker charges. The vigorish is the percentage of money a sportsbook takes from each winning wager.
Who Pays The Vigorish
Although it may appear to be the loser, it is the winner that pays the vigorish. Because the bettor never gets any money returned for losing wagers they do not pay the vigorish. The winning bettor, on the other hand, does not receive the entire amount risked by a bettor on the opposite (losing) side.
For example: This example assumes odds of -110 (11 to win 10)
Bettor A risks $110 to win $100 on Side A, and Bettor B risks $110 to win $100 on Side B. The winner receives $210 from the sportsbook, and the loser receives nothing. The sportsbook made $10 on this transaction. The total amount booked is $220. The total amount paid is $210 ($220 - $210 = $10). The vigorish cost for this hypothetical wager is 4.55%. This is because $10 is 4.55% of $220. Had the bettors bypassed the sportsbook and bet against each other then there would be no vigorish fee. The winner would receive the entire $220.
Calculating The Vigorish You Pay
To calculate the vigorish a winner pays for a single wager you must compare the total amount the book holds to the total amount risked by both bettors. Below I will cover how you calculate the vigorish paid standard -110 odds (11 to win 10) wager and a 10-cent money line wager with the favorite price of -120 and the underdog price of +110.
Assume both bettors risk a variable amount to win $100 on odds less than +100, and assume both bettors risk $100 to win a variable amount on odds greater than +100. Keep in mind that for actual wagers you should follow a strict money management plan I have detailed in my article on Money Management.
Calculating Vigorish For Standard -110 Odds
- Calculate total booked: $110 + $110 = $220
- Both bettors risk $110 to win $100
- Calculate total paid to winner
- $110 + $100 = $210
- Calculate total held by book
- $220 - $210 = $10
- Calculate cost of vigorish
- (10 x 100) / 220 = 4.55%
Calculating Vigorish For Varying Odds - (-120 favorite / +110 underdog)
- Calculate total booked: $120 + $100 = $220
- Bettor A risks $120 to win $100 on the favorite
- Bettor B risks $100 to win $110 on the underdog
- Calculate total paid to winner
- If Bettor A wins the amount paid is $220
- If Bettor B wins the amount paid is $210
- Calculate total held by book
- If Bettor A wins: $220 - $220 = $0
- If Bettor B wins: $220 - $210 = $10
- Calculate cost of vigorish
- If Bettor A wins: (0 x 100) / 220 = 0.00%
- If Bettor B wins: (10 x 100) / 220 = 4.55%
As you can see the vigorish cost for this 10-cent money line wager is the same as the standard -110 odds. This example, however, is to help illustrate the point that the book, theoretically, only makes money when the underdog wins. This is only true if the action is balanced, but that is rarely the case. This discussion, however, is better left for another article.
Calculating Vigorish Over The Long Haul
Rarely, however, will you actually pay a flat 4.55% in vigorish. This is because you don't just make one play, you make many plays.
For example:
Over the course of 100 wagers you hit 55% for a total of 55 wins and 45 losses. Assuming you wager $110 to win $100 for every wager, you calculate your vigorish cost as follows:
- Calculate total booked
- 100 x $110 = $11,000
- Calculate total held by book
- 55 x ($110 - $100) = $550
- Calculate cost of vigorish
- ($550 x 100) / 11000 = 5.00%
As you can see, you are actually paying 5% vigorish, not 4.55%.
Summary
To be a profitable sports bettor you must overcome the vigorish the book charges you when you win. Having read this article you should now realize the importance vigorish plays in sports betting. It should be obvious to you now that the winners, not losers, pay the vigorish, and the more you win the more vigorish you pay.
- Ryan J. Parker | Ryan's sports betting blog
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