Betting Margin
A betting margin or "vig" (short for vigorish) refers to the commission or fee that a betting site charges for accepting a bet. It's essentially how the bookmaker makes a profit, regardless of the outcome of the event. The vig is built into the odds to ensure that the bookmaker doesn't lose money over time.
For example, in a standard bet where both sides have a 50/50 chance, instead of offering true odds (like +100 or even odds, which means you double your money), the bookmaker might offer odds of -110 on both sides. This means that you have to bet $110 to win $100, and the extra $10 is the bookmaker's vig.
In simpler terms, the vig is the "cut" that the bookmaker takes to facilitate the betting and ensure that they make money no matter what the outcome of the bet is.
How To calculate the Betting Margin
To calculate the betting margin from odds manually, you need to convert the odds into implied probabilities and then sum them up. If the total exceeds 100%, the excess represents the bookmaker’s margin.
The formula to calculate the betting margin is:
(Implied Probability Odd #1 + Implied Probability Odd #2) - 100%For example Bet #1 has odds of 1.5 (-200) and Bet #2 has odds of 2 (100). After you convert these to implied odds (see the betting odds calculator), Bet #1 has 66.67% and Bet #2 50% implied probability, for a total of 116.67%. The betting margin is in this case 16.67% (116.67% - 100%).