How to Calculate the Market Overround
Whether you’re an avid gambler or are just starting out in betting, the subject of how the bookmaker makes their money has always been one that sparks interest. The betting industry is a business, and it only makes sense that bookmakers get something in return for facilitating gambling activities for punters. Whether you are playing online on platforms with the best player margins like the GG.bet site or in retail sports betting shops, two things must stand. For one, the business has to be profitable for the operator, and secondly, the betting must remain 100% fair for the sports bettors.
This means that the bookmakers have to crunch the numbers to provide fair odds to the players while at the same time ensuring that they turn a reasonable profit on whatever outcomes are being predicted. So why and how does the bookie always end up winning? Well, before we answer that question, it’s also worth noting that a lot of mathematics is usually involved when calculating the odds of winning in casino games. The rules apply to both land-based casinos and online gaming sites such as GG.Bet Casino online.
While sports betting works with market overround, casino games often come with what is known as the Return to Player (RTP) rate. In a nutshell, the RTP is a measure of the percentage of stakes that a casino game will return to players over a long period – usually more than at least a million rounds of play. So, if, for example, you see a casino game having an RTP rate of, say, 96%, it means that eventually, the game will return a ratio of 92 cents for every dollar that players spend on the game. Likewise, oddsmakers have to play with the numbers for sports betting. Read on to discover how it works.
Vig and Overround
When it comes to a sportsbook’s expected profit margin, there are two terms that you will often hear of – vigorish (vig) and overround. While these two are sometimes used interchangeably, they are different. The vig also reffered to as juice is simply the bookie’s transaction fee on a wager placed by gamblers for an event, whereas overround is the sum of the reciprocal of all decimal odds of a betting market.
In a ‘perfect’ scenario, this number will add up to 100%, which translates to no profit margin for the bookie, which is obviously bad for business. However, when calculating the odds of a particular outcome, some games are more straightforward than others.
For example, if you are rolling a die, the probability of landing any of the 6 sides is 1/6. Thus, if a bookie offers payouts based on the true odds determined by the probability, they would end up with zero coins to facilitate the gambling.
However, say the bookie would like to make $1 for every $6 bet on the probability of landing a ‘3’, they would have to adjust the odds from the true 1/6 odds to implied 1/5 odds so that the players get a slightly smaller return for every bet placed. So, in this case, when players bet on the odds of landing a ‘3’, they will be paid $5 for every $1 they bet, and the bookie keeps $1 as profit.
Do the Math
Now that you have an idea of what goes on let’s look at how sports betting odds work. Say there is a match between Chelsea and Arsenal, and the odds that a bookie has put forward stand at 1.24 for Chelsea, 6.57 for a draw, and 14.31 for Arsenal. To work out exactly how much house advantage there is for this particular event based on predicted odds, the following formula can be used:
Overround=1Outcome 1+1Outcome 2+1Outcome 3
When calculated, you will get 1.0285 which means that the overround is 102.85%, meaning that if you bet long enough, you will get $100 in return on a $102.85 bet. Thus, the house gets to keep 2.85% of bets in the long run. You can calculate the vigorish from the overround and vice versa with the following formulas:
Vig=Overround(1 + Overround)
Overround=Vig(1 – Vig)
What does this mean for bettors, and how can you use the numbers to your advantage? The trick is to look for bookies with the lowest possible overround and place your wagers with them. Notice that all the odds presented to the punters by the bookmaker are ‘implied odds.’ As a match progresses, bookies will be working behind the scenes with teams of analysts and oddsmakers to adjust the odds accordingly so that betting activity is balanced across betting lines. This means that you still need to be observant at the end of the day and identify a losing bet from the activities unfolding on the ground.
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