A Bookmaker Margin, often referred to as the “overround” or “vig” (short for “vigorish”), is the percentage by which the bookmaker’s set odds for an event exceed the implied probability of all possible outcomes. In simpler terms, it’s the built-in profit margin for the bookmaker on a given market. By setting the odds in such a way that the total percentage probability for all outcomes surpasses 100%, the bookmaker ensures a profit regardless of the event’s outcome, provided there’s balanced action on all sides.
Why do bookmakers need a margin?
Bookmakers incorporate a margin as a safeguard to ensure they remain profitable over the long run. It compensates for the risks they take in offering bets and also covers their operational expenses. Without a margin, bookmakers would rely solely on accurate event forecasting, which is unpredictable and risky.
How is the bookmaker margin calculated?
To calculate the margin, one must first determine the implied probability for each outcome using the odds provided. Once the implied probabilities for all outcomes are totaled, subtracting 100% gives the bookmaker’s margin. A higher total indicates a higher margin.
Does a higher margin mean less value for the bettor?
Generally, yes. A higher bookmaker margin means that the odds offered to the bettor are less favorable. Consequently, bettors receive less value for their bets. It’s always beneficial for bettors to compare odds across different bookmakers to find the most value.
Are bookmaker margins consistent across all sports and events?
No, margins can vary depending on the sport, league, event, and even the betting market. Typically, high-profile events with a lot of data (like major football leagues) might have tighter margins, while niche or less predictable sports might carry higher margins due to the increased risk for the bookmaker.
Is it possible for a bookmaker to have a negative margin for promotional purposes?
While uncommon, some bookmakers might offer odds that result in a negative margin as a promotional strategy to attract new customers or to be competitive in the market. These offers are usually temporary and might come with specific terms and conditions.