How Vigorish Works

There are a number of techniques which UK betting sites use to make a steady profit.  One of the main techniques is charging vigorish.  If you are new to betting, you may be wondering what vigorish is.  Vigorish is sometimes just called “vig” for short.  It is also known as juice, the overround, or the margin.  And a lot of bettors, even ones who have been around the block a few times, misunderstand what it is and how it works. 

Vigorish is essentially a commission.  Say that a betting site is offering a wager on a coin toss, which by definition has a 50/50 chance of turning up heads or tails.  Picture that each wager costs £10, with the potential profit set at £20.  Now imagine the bets are also split 50/50, with half of the punters gambling on heads and the other half betting on tails.

What happens?  Well, say the bets on each side add up to £500, so the betting site takes in £1,000.  Then the coin lands.  Whether it lands on heads or tails, half of the bettors have now won.  That means that the betting site now owes £500 x 2.  What does that equal?  That’s right, £1,000, the same amount the site took in.  That means that the site neither profits nor loses in this scenario. 

Obviously no one can make a living that way, which is why vigorish is built into odds.  Instead of paying out £20 on a £10 bet, for example, the betting site might pay out £19.09.  You might not think that tiny amount would make a significant difference, but it does!  With the same example, if the betting site took in £1,000, and half the bettors won, then the site would owe £945.50 in payouts.  As you can see, they profit £45.50.  Expressed as a percentage (which is typical), this is a vigorish of 4.5%.

So, the higher the vigorish percentage, the higher the commission being charged through the odds.  The lower the percentage, the lower the commission.  In real life, all of this is a lot more complicated than a coin toss, which is why betting sites look to odds compilers for assistance setting vigorish and determining the odds for a given event. 

Here are some common misconceptions about vigorish:

• Vig is paid by the losers.
• You are actually charged 4.5% if you see vig listed at 4.5%.

Actually, vigorish is paid by the winners, and the charge is higher than you think, since you are actually paying the vigorish for both yourself and for the loser.  Remember, both of you were charged, but only you are paying. 

On the bright side, it is helpful to remember that vig is deducted from your winnings.  So if you are paying a lot of vig, it is because you are winning a lot of bets!  Just remember to factor it into your calculations when you are trying to determine whether your betting system is profitable.