On a variety of different platforms, one will come across values that represent a sportsbook’s vigorish or theoretical hold. There are a variety of reasons that one might need to calculate the hold in a market. One reason – and the easiest calculation – is to find value in a two-way market. We tackled that reason in a blog about implied margin. Another reason we may want to do this calculation is to find out which sportsbooks have the fairest lines. It’s this angle that we will be attacking today.
Can You Explain the Vigorish Again?
The vigorish is also known as the vig, theoretical hold, house edge and theoretical margin. It can be defined as the percent return to the sportsbook if there is perfectly even betting across all of the possible bets. In a two-way market (only two bets for a contest), a typical vigorish is around 4.7%. For a futures market, like PGA tournament winner or a NASCAR event, this number might be in the 40% range.
Let’s See An Example of A Vigorish Calculation
As we approach the end of the NFL season, I took at look at the odds for the 2022 Super Bowl winner at BetMGM. The image below shows the odds of all fourteen teams just prior to the start of the NFL Playoffs.
The first thing we do is convert all the American Odds into implied odds. This is essentially what the sportsbook believes are the true odds of each team winning the Super Bowl with the vigorish added in. In our example, the summation of implied margin for the fourteen bets is equal to 111.7%. Finally, to find the vigorish, we simply take 1-(1/1.117) to get an vig of 10.5%.
A Little More on the Calculation
I typically like to use Excel to do these calculations as it is easy and readily available software. For this type of analysis, it really is critical to have some type of spreadsheet software as one wouldn’t want to calculate this by hand. Without Excel, there are some great online utilities that do the same thing like this futures calculator at the Wizard of Odds.
The main reason that this calculation is important is to help find and use sportsbooks that give the best odds. Sportsbooks with a very high vigorish percentage are typically also the ones where good lines aren’t available. In conclusion, use this information wisely as there is always money to be made in the futures markets!