What are Sports Book Margins?
Margins, or “the vig”, is the amount charged by the sports book to take your bet. It is the difference in what is wagered and what is paid out to winners.
Do Oddsmakers Care If Players Win?
One of the most common misconceptions made by people new to the world of making sports picks is that oddsmakers don’t want people winning. While that seems like it would make sense, it isn’t actually the case at all. Oddsmakers are smart and set odds that result in half the people picking one team and half the people picking the other team. Because of the margin the bookmaker bakes in, this guarantees a profit, and so the oddsmaker couldn’t care less about who is actually winning or losing.
To understand what margins are and how they guarantee a profit for the bookmaker, it is best to start out learning how to calculate the margins first.
How to Calculate Sportsbook Margins:
If you know how to calculate implied odds, calculating margin is simple:
The sum of the implied odds – 1
If you don’t feel like learning about implied odds, here is how it is calculated for a 2 outcome market:
(1/price) + (1/price) – 1
So for a simple pick em market with a price of 1.91 for each side, we can see that the sportsbook margin is:
(1/1.91) + (1/1.91) – 1
1.047 – 1
.047
As a percentage, that gives us 4.7%. What does that 4.7% mean? It means no matter what, if the sportsbook offering that line can get 50% of bets to be placed on one side and 50% on the other, they make 4.7% of all the bets they take. It doesn’t matter which side wins or loses, sportsbooks just want volume!
Example:
To eliminate the concept of underdogs and favorites, we’ll look at a simple total bet for an NBA game:
Over 195.5 – 1.91
Under 195.5 – 1.91
Let’s assume that an oddsmaker gets Person 1 to risk 100 on the over, and gets Person 2 to risk 100 on the under.
Assume next that the match goes under the total- what happens?
- Person 1 loses the 100 he risked by picking the over.
- Person 2 is returned the 100 he risked. He is also returned a profit of 91 for correctly choosing the under.
- The oddsmaker was given 200 in total. He had to give Player 2 his risked amount back (100), as well as Player 2’s profit (91) which came out of the money that the oddsmaker kept from Player 1’s losing pick.
After the dust settles, the oddsmaker is left with 9, representing his profit.
Taking the profit (9) as a percentage of the total amount risked (200) gives us the oddsmaker’s profit margin: 9 / 200 = 4.5%.
Many oddsmakers advertise “low juice” odds, which reduce their take, providing an incentive for people to use their odds. Make sure you take the juice into consideration when shopping around for a new oddsmaker – they know that you probably won’t do the math on how much they charge, but as you can see, it really isn’t too hard! It pays to do your research first.
Want to see the margin your oddsmaker is taking without doing the math? Check out our margin calculator.