Vig, juice, margin and overround
“Vig” and “juice” are informal terms. “Overround” is a calculation from a complete set of quoted fixed odds. For mutually exclusive decimal prices d1 through dk:
Overround = (1 / d1) + ... + (1 / dk) - 1
Koning and Zijm call the reciprocal total the booksum and the excess above one the overround. That is a market snapshot, not a statement about how stakes will be distributed or how results will settle.
Two-outcome example
Suppose both sides are quoted at decimal odds 1.91.
- Side A reciprocal = 1 / 1.91 = 0.52356.
- Side B reciprocal = 1 / 1.91 = 0.52356.
- Booksum = 0.52356 + 0.52356 = 1.04712.
- Overround = 1.04712 - 1 = 0.04712, or 4.712%.
Basic normalization would assign each side 0.52356 / 1.04712 = 0.50. That does not prove each side truly has a 50% chance; it shows the equal allocation implied by this method and these prices.
Why overround is not realised profit
Actual operator results depend on accepted stakes, price changes, settlement, trading decisions, promotions, hedging and outcomes. Even with a positive quoted booksum, uneven liabilities can produce different realised results. Describe 4.712% as the displayed overround, not a guaranteed 4.712% profit.
Compare like with like
| Comparison | Required control |
|---|---|
| Operator A vs operator B | Same event, market, outcomes and timestamp |
| Opening vs closing | Same source and an explicit closing convention |
| Fixed odds vs exchange | Include commission and executable volume |
| 1X2 vs two-way market | Do not compare totals without explaining outcome count |
What the reader should do
Calculate overround to understand the complete quote, then evaluate the individual accepted price using a probability estimate and expected value. Lower quoted overround improves the price environment in general but does not establish that any particular selection is positive EV.
Check the zero-margin reference
For a fair illustrative two-outcome market with both sides at 2.00, booksum = (1 / 2.00) + (1 / 2.00) = 1 and overround = 1 - 1 = 0. This boundary test confirms the formula. Prices of 1.91 on both sides increase the booksum above one.
Do not infer that a source quoting 2.00 on one side has zero margin. The other mutually exclusive outcomes are required. Similarly, a single unusually high quote can coexist with a large total market margin. Use the complete snapshot to describe vig and the accepted selection price to calculate expected value.
Continue learning
- Next guide: Expected Value in Betting
- Related guide: How to Audit Football Tipster Claims and Records
Assumptions and limitations
The example is illustrative and assumes exactly two mutually exclusive outcomes with no push. Operator terminology varies. For de-margin methods and a three-outcome example, continue to overround and value.
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