A CRASH COURSE IN VIGORISH
...AND IT'S NOT 4.55%
Who Pays?...How Much?
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Chances are, if you ask several different sports bettors what percentage they pay their bookmakers you'll get several different answers, and, chances are, most of those answers will not be ringing with confident finality. Even battle-worn veterans who flatly answer "Four-and-a-half percent" are really operating with a false understanding of what's going on. Contrary to what many veteran gamblers believe, almost no one actually pays 4.55% in bookmakers' commissions.
Many bettors are also operating under the fallacy that losers pay vigorish. The fact is - as explained below - losing bettors actually play for free. Only winners pay vigorish...And it's not 4.55 percent.
WHO PAYS HOW MUCH VIGORISH?
In sports betting when risking 11 to win 10, vigorish is deducted from winnings, not added to losses. (See text below.) Figures below show that only the bettor who wins exactly half his bets pays 4.55% in vigorish. Everyone else pays something different. The higher your winning percentage, the higher the percentage of vigorish you must pay. Successful sports bettors who win more than 55% of their bets actually pay more than 5% in vigorish. Whenever you win a bet when risking 11 to win 10 the bookmaker charges you 9.1% of your winnings.
W-L...VIG% W-L...VIG% W-L...VIG% W-L...VIG%
0-100...0.00% 25-75..2.27% 50-50..4.55% 75-25..6.82%
1-99...0.09% 26-74..2.36% 51-49..4.64% 76-24..6.91%
2-98...0.18% 27-73..2.45% 52-48..4.73% 77-23..7.00%
3-97...0.27% 28-72..2.55% 53-47..4.82% 78-22..7.09%
4-96...0.36% 29-71..2.64% 54-46..4.91% 79-21..7.18%
5-95...0.45% 30-70..2.73% 55-45..5.00% 80-20..7.27%
6-94...0.55% 31-69..2.82% 56-44..5.09% 81-19..7.36%
7-93...0.64% 32-68..2.91% 57-43..5.18% 82-18..7.45%
8-92...0.73% 33-67..3.00% 58-42..5.27% 83-17..7.55%
9-91...0.82% 34-66..3.09% 59-41..5.36% 84-16..7.64%
10-90..0.91% 35-65..3.18% 60-40..5.45% 85-15..7.73%
11-89..1.00% 36-64..3.27% 61-39..5.55% 86-14..7.82%
12-88..1.09% 37-63..3.36% 62-38..5.64% 87-13..7.91%
13-87..1.18% 38-62..3.45% 63-37..5.73% 88-12..8.00%
14-86..1.27% 39-61..3.55% 64-36..5.82% 89-11..8.09%
15-85..1.36% 40-60..3.64% 65-35..5.91% 90-10..8.18%
16-84..1.45% 41-59..3.73% 66-34..6.00% 91- 9...8.27%
17-83..1.55% 42-58..3.82% 67-33..6.09% 92- 8...8.36%
18-82..1.64% 43-57..3.91% 68-32..6.18% 93- 7...8.45%
19-81..1.73% 44-56..4.00% 69-31..6.27% 94- 6...8.55%
20-80..1.82% 45-55..4.09% 70-30..6.36% 95- 5...8.64%
21-79..1.91% 46-54..4.18% 71-29..6.45% 96- 4...8.73%
22-78..2.00% 47-53..4.27% 72-28..6.55% 97- 3...8.82%
23-77..2.09% 48-52..4.36% 73-27..6.64% 98- 2...8.91%
24-76..2.18% 49-51..4.45% 74-26..6.73% 99- 1...9.00%
(Figures assume all bets are same size)
100-0...9.09%
The bookmaker's rather unique commission has no precise English definition, but the French word for it is "vignes." American gamblers have long since converted "vignes" to "vigorish," or to just plain "vig." Nevertheless, the bookmaker's fee is as much a commission as a broker's fee for handling a stock transaction or a Realtor's fee for handling a real estate deal. To account for this commission on standard pointspread wagers or over/under wagers, at traditional bookmakers for every $10 a bettor wants to win he is required to risk $11 - to "lay" $11. (Many internet bookmakers now charge less, allowing bettors to risk as little as 10.5 to win 10, but for our purposes here we will use '11-10' bets.) These 'eleven-ten' bets lead many gamblers to conclude that they are paying the bookmaker a commission of 10 percent if they lose a bet, but that they pay nothing if they win.
That's not correct. Here's how it actually works: Say two bettors each risk $110 with the same bookmaker on opposite sides of the same proposition, each bettor trying to win $100: The bookmaker receives a total of $220 from the two bettors. One bettor wins, one bettor loses, and the winner picks up a total of $210; - the $110 he put at risk, plus his $100 profit. That leaves the bookmaker with $10 gross profit as his vigorish on the deal. The bookmaker kept $10 of the $220 total amount risked.
That's a service charge of 4.55 percent. Had the two bettors each risked $110 against the other without using the services of the bookmaker, the winner would have walked away with $220 instead of $210. The bookmaker kept 4.55 percent of that $220. The amount risked by each bettor was $110; not 100 dollars.
($10 divided by $220 = .0455)
So the bookmaker does, indeed, charge 4.55 percent of the total amount put at risk by both bettors...But be sure to note which bettor paid both bettors' share of the vigorish. It was not the loser. The loser - since he lost the bet - would have lost whatever he put at risk, with or without the services of the bookmaker. The winner paid. The winnings, which would have been $110 without using the services of the bookmaker, were shorted by ten dollars - 9.1 percent.
($10 divided by $110 = .090909091)
The winner got back only 191 percent of the amount he put at risk.
($110 x 1.90909091 = $210)
This is also the way it works in virtually all other casino games, such as craps, roulette, baccarrat, blackjack, and even slot machines. When a loser loses, he loses what he puts at risk, of course. In roulette, for example, someone betting on an 'even-money' proposition (red or black, high or low, odd or even) and losing, loses his bet, whatever he risked, period. But someone winning an 'even-money' roulette proposition does not get paid the 'fair' odds of 10-to-9. (There are 20 ways to lose an even-money bet at roulette and only 18 ways to win. The odds are 10-9 against you.) The winner only gets paid 1-to-1 odds. In all these table games, the winner pays the vigorish.
Of course, in a larger, more philosophical sense losers not only pay the vigorish but also the light bills of the casino and the salaries of the casino employees and all the other expenses of the casino. But we're not addressing philosophy here. We're addressing how the business of gambling actually 'works'. This is no place to play with words and semantics. Vigorish is deducted from winnings.
It is important to understand this point. You can be sure most bettors don't. In effect, the bookmaker becomes a partner of the winning bettor. Understanding this point is important when figuring the real cost of various sports betting opportunities, including parlays. (See our article, Parlays & Profit.) For example, laying 12-to-10 is a one-way ticket to the poorhouse. Laying 12 to win 10 costs the winner a whopping 16.67% of his winnings.
The illustration accompanying this text (above) shows precisely the cost of vigorish when dealing with 11-10 bets. Notice that since the winning bettor is always charged for the vigorish, the higher the percentage of bets won, the higher the percentage of vigorish paid. It might help if you picture what happens this way: If you lost all 100 of 100 bets, you would lose 100 percent of the amount put at risk - with or without the services of a bookmaker - but if you won all 100 of 100 bets, you would win only 91 percent of the total amount you were required to risk.
In those two extreme cases, the 0-100 loser would have played for 'free' while the 100-0 winner would have paid more than 9 percent in vigorish. Notice also that even though the bookmaker's commission is 4.55 percent, it is only the bettor who wins exactly half his bets who pays precisely 4.55 percent in vigorish. Everybody else pays something different. In order to break even you must win 53 percent of your bets - assuming the sizes of all your bets are exactly the same - and in order to win 53 percent of your bets, you must pay 4.82 percent in vigorish. Successful sports bettors who win more than 55 percent of their 11-10 bets typically pay more than 5 percent in vigorish.
