It’s the classic trap into which nearly every amateur sports bettor falls, and one of the main sources of funding for those large casino’s where people end up going to make their bets.
Let’s say that, over the course of the season, you keep track of your college or NFL picks against the spread. In a particularly good season, you might come out with a “winning percentage” of somewhere around 60%, or maybe even 65% if you’re having a great season.
Succumbing to the classic “hot hand fallacy”, thinking that your current “hot streak” will continue if you actually start to put some money on those picks, you convince yourself that, by sheer math, if you place equal amounts of money across 100 bets, assuming 60 or so of them will continue to be successful, you’re still going to make money, since you won 60% of the time, while losing only 40% of the time.
But the truth of the matter is that the world of sports betting is designed to connive you into precisely that type of thinking. Simply put, if you were to make ten bets of equal amounts, picking ten favorites to win a game, even if your bets resulted in a 50/50 won-loss split, you’d still lose money.
How is that possible?
Introducing The Vigorish
It’s because, as the saying goes: the house always wins. More specifically, it’s because the house uses a built-in commission structure known as “the vigorish” – or “vig,” for short – to ensure that they make money regardless of the actual outcome of a game.
You might not have heard of the “vig” before, but if you’ve ever placed a sports bet, you’ve almost certainly paid one. For example: let’s say a particular bet was assigned -110 odds for a given outcome. That means that if you bet $110, you’d only get $100 back; not only are you getting less than 1:1 odds, but you’re also losing money on the bet. That’s how the sportsbook remains profitable; even if a bettor correctly picks the outcome of a game.
That’s why the original idea of being able to correctly predict the outcome of over 60% of games, and thinking that you could make money this way, is a fallacy. For one, even the savviest sports handicappers end up with a winning percentage of around 55% over the long run, and that’s with managing money, finding value bets, hedging bets, and being glued to full-time research. So thinking that you’ll be able to beat that is very ambitious — if not foolish thinking.
But more importantly, recreational sports picks usually assign the same weight to pick the favorite as they do to picking an upset. For instance, if someone hands you a slate of 16 NFL games and their respective point spreads, if you chose the favorites for each one of those games, you’re very likely to end up with more wins than losses, since those teams are favored for a reason. In other words, those picks are made in a vacuum of sorts.
As mentioned, the vig makes it such that if you were to try and place a bet of $100 on each one of those, even if you were to pick half of the games correctly, you’d still end up losing money, as opposed to breaking even.
Taking it one step further, let’s say that you made 100 wagers on teams that were given -110 odds. In order to break even, you’d have to pick just over 52% of those games correctly — the break-even rate for that “juice” (a common synonym for the vig) is 52.38%.
In many cases, games with a vig of -110 are usually ones where there’s as much of a chance that either team wins. If one team is demonstrably better than the other, the vig goes up, and the number of bets you’d have to correctly make on this elevated juice would go up commensurately. For example, if you made 100 bets on teams given -135 odds, you’d have to correctly pick approximately 57.44% of those games correctly to break even.
Deeper Example of the VIG
Simply put, the Vig is the Cut or Fee of the bookmakers. In other words, it’s their commission, and it’s how they make money. Most bookmakers are not focused on whether you win or lose. They are more focused on keeping their books balanced. They do this by adjusting the odds whenever necessary so that there are an equal amount of bets on each side. This allows them to make their Vig and be positive no matter the outcome of the match.
A fair bet with no fees would be two people betting $100 on a game. The pot is $200, and the winner takes it all.
Alternatively, this point spread example explains how it works with a bookmaker:
49ers – 4.5 (-110)
Rams +4.5 (-110)
In this example, each player will have to bet $110 to win $100, no matter which team they pick. Winners will get their money back ($110) plus they will win $100. The pot for two total players will be $220. The goal of the bookmaker will be to take in the same amount of Rams bets as 49ers bets. Let’s say the Rams won the game and the bookmaker had taken two Rams bets but did not take any 49ers bets. In that case, the bookmaker would have to pay the $220 pot back to the winners, along with another $100 to each of them, ultimately losing $200. However, if the bookmaker can successfully balance their books depending on where the bets are going and take in the same amount of bets for each team, then the bookmaker will always win. So if they take one Rams bet and one 49ers bet, they would only have to pay $210 to the winner ($110 + 100), thus keeping the extra $10 in their pot as a commission. Get it?
Remember: SportsBooks Never Hand Away Free Money
The vig isn’t merely a tool for the casinos to stay profitable. They’re also an excellent way for them, or online sportsbooks, to recoup some of the money that they offer unsuspecting bettors to open up an account with them.
As sports betting becomes increasingly legalized across the United States, you’ll start hearing more and more venues offering sports wagering services provide some “matching bonus,” where they’ll do a 1:1 match of any funds deposited (up to a certain amount). For example, if you deposit $250 into a sports betting account with them, they’ll match that $250, giving you $500 to play with.
While that might sound great, many of these sportsbooks will compensate for those funds given — in case they have to pay them out some day — by bumping up the vig for their bets.
The vigorish isn’t standardized across all games; it’s whatever the sports book wants it to be. So, you could see the vig being -105 in one place (that might not offer any free benefits to bettors) and then being -115 in another place (where they might offer a deposit bonus that they might need to recoup).
Nobody Said Sports Betting Would Be Easy
Whether or not you think it’s fair or unfair that you have to pay the sportsbook a surcharge of sorts for a correct pick is irrelevant, because the vig is not going anywhere.
So, if you’re someone who has serious aspirations of making some coin off of sports betting, you’re going to have to treat it more like work, and less like a recreational hobby. Shop around for the best vig, and use those to hedge your bets made on teams or games with more longshot odds, which will have higher payouts if you win. Your other option is to look for a free sports betting for real money website. These are far and few, but it removes the risk.
But at the end of the day, those cushy hotels in Las Vegas wouldn’t exist if it weren’t for stacking the odds in their favor, regardless of what happens in a sporting event.