The Concept Of Vigorish Or Juice Explained
Those familiar with betting on sports will know that there exist several different ways in which the meaning of the term “vigorish” can be explained. While English bookies mostly prefer the use of the shortened “vig”, American bookmakers will often refer to “juice” or even “take”.
At the end of the day, the meaning of the word isn’t all that complex – even despite it’s diverse array of references. Vigorish (or juice) basically refers to the amount of money (or commission) a bookie charges on every bet placed on behalf of a bettor.
Vigorish = Bookmaker’s Profit
Since bookies practice bookmaking as a profession, or in other words, a way to make money and earn a living, it stands to reason that it is necessary for the bookie to show a profit on the various events offered – regardless of the outcomes of those events.
As such, the business of the bookmaker isn’t to “care” which team wins and which team loses – but simply to have the “book” balance by the time the total number of bets have been reached. This ultimately leads to a difference, which is then considered the bookmaker’s commission, or cut.
The vigorish, then, is a crucial step towards showing a profit – and actually the very first step any bookie would take before beginning to adjust the odds on offer. This obviously also implies that no two “vigs” are the same, i.e. the vigorish will all depend on the bookmaker’s expenditures versus the bookmaker’s anticipated income.
The Vig Affects The Odds
The fact that the bookies themselves establish the vigorish for every event on offer doesn’t mean they’re free to charge bettors whatever they want in terms of their slice of the pie. International bookmakers typically set the vigorish at about 10 per cent per event. This may not be regulated as such, but it does provide the bettor with a guideline to be used as a measuring stick of sorts.
As for how the vigorish can be calculated, there exists a simple formula:
V = 100% (1 – (p * q)/(p + q)) – with p and q referring to the decimal payouts applicable to each outcome.
Because of the fact that the vigorish is essentially baked into the very odds as a so-called “overround”, it will shift the numbers as offered by the bookmaker. This is also precisely why it’s so important to know how to calculate the vig applied to each event. By removing the vigorish from the equation, the bettor is able to establish what the bookmaker actually anticipates happening in a specific game or race.
“Cleaning” The Money Line
Removing the vigorish is essentially “cleaning” up the bet line. This creates a new, more accurate line not influenced by bookie profit margins.
There are several steps that can be followed to clean the bet line. But all of these ultimately involve making use of a formula that takes into account the actual odds. Once the actual probable outcome has been determined, it is then helpful to also compare one’s own odds-making efforts with that of the bookmaker so as to determine whether a bet line has real value.