Sports
Have you ever wondered how sportsbooks make their money?
Apart from the obvious fact that they keep the money staked on lost bets.
Well, for every bet the sportsbook does charge a small fee, but you probably never noticed it.
This is what is called the juice, or vig.
All sportsbooks use juice, and that is how sportsbooks can make their money and keep operating.
The easiest way of explaining juice is to take the example of a simple coin flip.
Each round will either end with a heads or tails, and the chances of landing either is 50:50.
Now, let’s say that you bet on heads for 10 rounds and you win 5 rounds.
The remaining $0.5 becomes the sportsbook’s juice.
These bets will never offer even money as the sportsbook would not make any theoretical profit.
To calculate the exact juice, you will need to calculate the implied probability of both teams.
When the implied probabilities on both bets are added together, the number will be over 100%.
The surplus is the house edge.
you might also apply the same formula to the moneylines, where the odds are not as evenly balanced.
Added together, the house edge is 4%.
Football is a highly popular sport for bettors, and matches have three possible outcomes.
Arsenal is the favourite to win this game, and its IP is 47.62%.
Added together, the resulting percentage is 105.6%.
The juice in this case is 5.6%.
To keep things simpler, here is a betting market on a race with 10 horses.
This is far larger than the juice that is applied to two-way or three-way bets.
However, with some careful research, you will notice that some sportsbooks have a larger juice.
Usually, you will not notice a difference in point spreads as the juice is easy to spot.
Instead, look at the three-way bets offered and there may be some discrepancies.
The second sportsbook has a total IP of 109.57% making the juice 9.57%.
The first sportsbook has a more player-favourable house edge.
However, this is only one bet.
It makes the sportsbook money after hundreds, if not thousands, of bets are placed.
