What is Vigorish/Juice? How to Remove Them From the Betting Odds
When you place a bet on a betting sites, the operator makes a profit from your bet. How can we know how much they take from us for sure?
What is Vigorish/Juice?
House edge is called vigorish or vig or juice, also known as the charge charged by bookmakers for facilitating the bet. You can understand this term similar to the profit that store owners get from you when purchasing in retail stores for the products they sell.
Example: If you bet $20 on a match with a friend, the winner will receive $20. However, if you bet at a bookmaker, you won't get the full $20 but have to pay a cut to the book for taking your action.
If you don't understand the concept of vigorish or juice of sportsbooks, we will take a closer look at them shortly, including how they are calculated and what it means for your overall profit.
Juice/Vig Definitions & Examples
Juice/Vig is a concept that refers to the amount a bookie can take from each player's bet. It is usually displayed right next to a point spread as follows:
|Man City||(-2.5) -110|
|Leicester City||(+2.5) -110|
-110 represents a 10% fee cut from your bet no matter which side you want to bet on.
Let's analyze the example from the sportsbook DraftKings above.
Man City (-2.5) -110 is the Favorite team, and Leicester City (+2.5) -110 is the Underdog team.
Accordingly, -110 means that for every $10 that you want to win when betting on Man City, you need to spend a bet of $11. The same goes for Leicester City; for every $10 you want to win, you have to risk $11.
Usually, Vig/Juice on most soccer point spreads will be -110 for both teams, but it can be different in some cases.
Suppose if the number of players betting on Man City is more, but the bookie doesn't want to move the difference from -2.5 to -3, they can adjust the Juice/Vig to -120 in Man City and even + 100 in Leicester City.
How to Calculate Implied Probability
Every set of odds in sports betting is related to the probability of all the outcomes offered. In an even-money bet, the probability of winning for each side is 50%. This means that the implied probability of that event is 100%. However, the implied probability of placing a sports bet will always be greater than 100%, because it will include the house edge.
|Vegas Golden Knights||-225|
To calculate juice/vig, you can follow the formulas that we give below.
Implied probability = risk/return x 100
Accordingly, you need to bet $300 on the Washington Capitals team to win $100 (total profit is $400).
The implied probability of the Capitals winning = 300/400 x 100= 75%
Similarly, you need to bet $100 on the Vegas Golden Knights team to win $225 profit. So the implied probability of the Golden Knights winning = 100 / 325 x 100 = 30%
The total implied probability = 75% + 30% = 105%.
That means the sportsbook is earning a 5% vig on The Washington Capital vs Vegas Golden Knights.
As you can see, the sum of total implied probabilities is more than 100%. Thus, by effectively taking wagers on a range of outcomes that are greater than the actual possible outcomes. This is how the bookie can ensure that the profits they make will be more than the money they spend. In the example above, the bookmaker would expect to pay out $100 after receiving $105 worth of wages.
How to Calculate the Vig as a Percentage
You can calculate this percentage using the following formula:
Vig = 1 – (1/Overround) x 100
Vig = 1 – (1/105) x 100
Vig = 0.0476
Vig = 4.76%
How to Calculate Actual Probability (Odds without the Vig)
You can calculate Actual Probability using the formula below:
Actual probability = team implied probability / total implied probability
Compare the actual probability of the Capitals winning = 75/105 = 71%.
The actual probability of the Golden Knights winning= 30/105 = 29%.
To check if you have calculated the actual probabilities correctly just add up both of your actual probabilities. The total should be 100 or 1, as a percentage or decimal, respectively: 71 + 29 = 1.00. or 100%.
From there, you can see the actual probability of each outcome as estimated by the bookie before they add the vig/juice.
Why You Should Remove the Juice?
Sportsbooks are companies that are in the business of dealing with risk, but they like to play things safe themselves. Therefore, they will guarantee their profit for each side on any betting line in the optimal ratio to cover the payout and profit. This is why the odds will change in the lead-up to an event to attract players to bet on each hand of the line or to include a higher ‘vig’ percentage to guarantee profit.
Because the odds will be related to your profit rather than the possible outcome of the match, you need to remove the vig/juice from the betting line to get an accurate picture of the actual probabilities oddsmakers to assign to each potential outcome.
It is called "actual probability" to distinguish it from "implied probability", which includes juice in the form of an overround.
Figuring out the actual probabilities will give the player a better idea of the bookmaker's expectations on each side. From there, you can compare how much the bookie has raised on a betting line, or you can compare the handling fees baked into the odds at two different sportsbooks.
Through the above article, players can see that removing the vig provides a better view for sports betting. If you don't remove vig/juice then you won't be able to guess the bookies' views of the teams in the game.
Hopefully, this article will help you better understand vig/juice in sports betting. For more great articles on sport betting tactics and tips, check out our guide to the sharpest strategies in betting. Good luck!