Sportsbook Basics: How to Compute the Vigorish

In sports betting, vigorish is a sportsbook's commission for taking bettors' wagers. It's not unlike a real estate agent or a stock broker. In this article we will show you how to compute the vigorish for moneyline odds.

You may ask who pays the vigorish, the winner or the loser? Well, it depends on how you look at it. One can say the winning bettor wins less than they would without the vigorish, so they pay it. Or one can say the losing bettor bets and therefore loses more than they would without the vigorish, so they pay it. The glass of water is either half-full or half-empty, so to speak.

Now to compute the sportsbook's commission.

HOW TO COMPUTE THE VIGORISH FOR EQUAL ODDS

By equal odds, we mean both sides of a bet wager equal amounts of money. The standard vigorish is 10%, so to win $100 for $100, one bets $110.

First, let us add the wagers of both bettors: Total Wager: Bettor 1's $110 + Bettor 1's $110 = $220

Now, for the amount paid to the winning bettor: Winner's original bet of $110 + Loser's $100 (excluding $10 vig)

And what is left to the sportsbook? Total Wager of $220 - Winner's $210 = $10

So as you can see, only one side pays the vigorish. It's just not clear which side! Either the winner wins $10 less, or the loser loses $10 more.

To compute the vigorish percentage: ( 10 x 100 ) / 220 = 4.54%

COMPUTING THE VIGORISH FOR UNEQUAL ODDS

Moneyline odds typically have varying or unequal odds. This is due to the fact that the two sides of a match (players, teams, etc.) seldom attract equal numbers of bettors. So the moneyline is adjusted in favor of the underdog to draw more wagers to it. It's important to understand that the moneyline is not intended to reflect the factual odds of who will win the match; rather its purpose is commercial: to make sure both sides get wagers. This way, the sportsbook gets a commission no matter who wins.

Now to compute the vigorish for unequal odds. The odds for this example is +250 vs. +200,

Total Wager: $250 + $100 = $350

Now, for the amount paid to the winning bettor: If the favorite wins, the Favorite Bettor gets $100 plus the $250 originally waged = $350. If the underdog wins, the Underdog Bettor gets $200 plus the $100 originally waged = $300.

How much the sportsbook is contingent upon who wins. Remember, the total wager booked is $350: If the favorite wins, the whole $350 is paid out to the Favorite Bettor. If the underdog wins, $300 is paid out to them, leaving $50.

The sportsbook profits by $50 if the underdog wins.

So in theory at least, the sportsbooks profit only when there is an upset. Now you know how happy these folks must have been whenever tennis great Steffi Graf would lose a match, or the Chicago Bulls when Michael Jordan was with them! Today you can bet they're praying for Tiger Woods to lose!