Understand Odds as Probability With Overround

The Relationship Between Odds and Probability

Odds on a selection come from the probability of that selection winning. There is an inverse relationship between odds and probability.

Favorites have a higher probability of winning so get lower odds, underdogs have a lower probability of winning so get higher odds.

To work out what probability odds represent, divide 100 by the decimal odds, that is:

100 ÷ odds = probability %

For example with decimal odds of 2, it’s as follows: 100 ÷ 2 = 50%

Many people check the 50:50s to compare the competitiveness of sportsbook odds across different events without a calculator.
These are markets with a theoretical 50% chance of going either way, also known as “pick ’em”.

A fair bet would be odds of 2 which represent 50% probability for each selection, totaling 100% probabilities.

The Sportsbook’s Overround

The sum of the probability for all possible outcomes in an event must be 100%.

For example, in an NBA game (no draw) if one team has a 60% chance of winning then the other team must have a 40% chance of winning.

• But if the sportsbook sets odds representing 100% probabilities, they would make no money. So they give you lower odds.
• Lower odds represent a higher probability.
• If we add up the probabilities of these odds they will equal more than 100%.

A low-margin sportsbook like BetBTC sets their 50:50s at odds of 1.93. This represents a 51.81% probability for a sum of 103.63%. A high-margin sportsbook might offer 1.88, which represents 53.19% probability, for a sum of 106.38%.

The true probabilities total 100% so the sportsbook offering 1.88 is giving themselves a 6.38% advantage.

The amount over 100% is the sportsbook overround, also known as juice, vigorish, vig, the sportsbook’s edge, or the take. If the sportsbook offers odds so that the sum of the probabilities they represent is 105% that is a 5% overground.

Overround is the enemy of the bettor because the higher the overround the lower the odds
and the less the return for winning bets.

Overround in Different Types of Markets

Some sportsbooks choose a point spread or points total which is not quite 50:50. For example handicapping a game at 8.5 points even though the market consensus says it should be 7.5 points. This makes it harder to compare to other sportsbooks who have the spread at 7.5 points so we need to work out the overround.

Selection	Odds
Boston Celtics –8.5 points	1.95
L.A. Lakers +8.5 points	1.80

100 ÷ 1.95 = 51.28
+
100 ÷ 1.80 = 55.55
=
106.83

So the overround is 6.83%

Another trick sportsbooks use is to have good odds on markets with 2 selections but less competitive odds on 3 way and larger markets.

In these markets, it’s harder to see the value just by looking at the odds.

To calculate the overround on a 3-way market like

Selection	Odds
New York Red Bulls	1.70
Draw	3.55
L.A. Galaxy	5.00

100 ÷ 1.70 = 58.82
100 ÷ 3.55 = 28.17
100 ÷ 5.00 = 20
58.82 + 28.17 + 20 = 107.02

So the overround is 7.02%

For that reason, you can’t just compare 50:50s to work out how competitive sportsbook odds are. The best thing to do is check the odds comparisons and use the overround calculator.

Overround works exactly the same for a market with any number of possible outcomes so long as all possible outcomes are available for betting.

Some overround has to be applied to all selections in a market, so in general markets with more selections will have a higher total overround.

You need to use crypto odds comparisons to get the best odds on any selection.

When you combine the best odds on every selection from multiple sportsbooks you effectually get a much lower overrround!