You need to get good odds to be a long term winning sports bettor. If you can grasp the concepts in this article you are doing better than 95% of the betting public and are well on your way.
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.
100 ÷ odds = probability %
For example with decimal odds of 2
100 ÷ 2 = 50%
A lot of people check the 50:50s to compare the competitiveness of sportsbook’s odds across different events without needing a calculator. These are markets with a theoretical 50% chance of going either way, also know as “pick’ems. 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 that represented 100% probabilities then 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 Nitrogen (review) sets their 50:50s at odds of 1.93. This represents 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 sportsbooks 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% overround.
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 of 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.
|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 over round 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
|New York Red Bulls||1.70|
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%
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.