Definition
In a fair market, the implied probabilities of all outcomes add up to 100%. In a bookmaker market, they usually add up to more than 100%. That extra percentage is the overround, which represents the bookmaker's edge.
Simple example
Imagine a two-outcome market where each side is priced at decimal odds of 1.91. Each price implies a probability of 52.36%. Together they add up to 104.72%.
The extra 4.72% is the overround. That margin is why blindly betting into efficient markets is usually a losing game.
Why it matters
The vig reduces your expected value. Even if your handicapping is decent, you still need to overcome the bookmaker's margin before you can have a real edge.
How sharp bettors respond
- Shop across multiple bookmakers for the best available price.
- Convert odds into implied probability before comparing them to your true estimate.
- Focus on markets where books are slower or less efficient.
Related terms
- Expected value tells you whether the remaining price is still profitable.
- Implied probability shows how to strip odds down into break-even percentages.