Bookmaker vigorish--who pays and how much?

[carcanaques 10]

I'm sure quite a few of you are going to place a bet or two tomorrow on NFL games and I wanted to share the inside scoop on the "vig." Unfortunately, I can't do this in a few short paragraphs and I know you guys like detailed explanations and backup, so I'm going to spend a bit of time getting my thoughts together and post it here, rather than the other forum. I hope to have this done before the games start (not that it will have any bearing on your wagers).

 

Stay tuned.

[TinGull 10]

http://www.ultimatecapper.com/forum/index.php

 

Maybe you should be posting all of your sports betting stuff on that site?

[carcanaques 10]

Is that a suggestion or an order? Maybe you should lock this thread because you deem it to have no value? And all the poker talk should also go somewhere else too? Why do you have a problem with this? It is in the Generral Discussion forum. Let James decide if this is inappropriate.

[carcanaques 10]

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.

 

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.

[Reaver 10]

Hey watch it clown. You're a guest here. Don't forget that.

[Reaver 10]

Tread lightly. Your threads keep making waves and are borderline inappropriate manner-wise.

 

You show up out of the blue and want to get combative. Seek life elsewhere if that is what you're here for. It doesn't fly around here.

[carcanaques 10]

How dare you call me a clown! I resent that and demand an apology. I have been nothing but courteous and professional here.

 

Doesn't every new member come out of the blue? Is this a private country club or an open forum?

 

And who are you to tell me what to do here? If James has a problem with my posts, I'm sure he'll let me know.

[Soultrader 12]

Yes, that clown comment was inappropiate. I have no problem with carcanaques' posts on money and risk management. They have been very interesting and can be related to trading.

 

This forum is welcome for all new members. Please keep it this way.

[carcanaques 10]

Thank you James for the clarification. I am enjoying my time here, however, if you feel I have overstayed my welcome and/or violated your rules, please let me know and I will depart with dispatch.

[aiki14 10]

I'd like to make a correction on the word Vigorish, it's actually from Yiddish slang.

 

The American Heritage® Dictionary of the English Language: Fourth Edition.

 

Vigorish

 

SYLLABICATION: vig·o·rish

PRONUNCIATION: vgr-sh

NOUN: Slang 1a. A charge taken on bets, as by a bookie or gambling establishment. b. The rate or amount of such a charge. 2. Interest, especially excessive interest, paid to a moneylender.

ETYMOLOGY: Yiddish slang, from Russian vyigrysh, winnings : vy-, out; see ud- in Appendix I + igrat', to play.

[darthtrader 10]

yea damn guys, chillout. this is really interesting stuff.

 

carcanaques, have to read this a few times to grasp it yet.I would be interested in hearing how you view money management as far as trading goes.

Have you ever read Secrets of Professional Turf Betting? Thats a book I've read alot about but have never payed up for the used price.

[Reaver 10]

How dare you call me a clown! I resent that and demand an apology. I have been nothing but courteous and professional here.

 

Doesn't every new member come out of the blue? Is this a private country club or an open forum?

 

And who are you to tell me what to do here? If James has a problem with my posts, I'm sure he'll let me know.

 

You're not getting an apology. Deal with it. I don't say things I don't mean.

 

We'll see how it all pans out.

[carcanaques 10]

You're not getting an apology. Deal with it. I don't say things I don't mean.

We'll see how it all pans out.

Suite yourself. For the record, I offered a peace pipe to Reaver in a PM and it was rejected. Apparently, he thinks he owns the place. Oh well, that's between him and James.

[carcanaques 10]

yea damn guys, chillout. this is really interesting stuff.

 

carcanaques, have to read this a few times to grasp it yet.I would be interested in hearing how you view money management as far as trading goes.

Have you ever read Secrets of Professional Turf Betting? Thats a book I've read alot about but have never payed up for the used price.

Never read that book as I stayed for away from horses.

 

As far as trading goes, my money management is garden variety. I won't risk more than 2% of my capital on any trade and no more than 4% per day, which is to say, if I have two stoputs in a row, I quit for the day and live to trade another.

[BlowFish 10]

Things appear to be quite different to the UK (hence my comment in the other thread about betting being far from zero sum, well at least here).

 

Is this all legislated in th US (how much a bookie can charge and how they set odds)? Lets say your taking bets on a match where the outcome can only be A wins or B wins if you only get $1 on A and $100 on B you would offer odds of 100 to 1 (or maybe a bit less to make your 'vig') In the UK the bookies can set their rate without restriction (as far as I know). What if a bookie can't unload all their risk as bets get taken? They are now in a vulnerable position no longer being win win? Seems reasonable for them to get paid to take this risk.

 

A side question are most bets in the USA settled at 'starting prices' thats the case in the UK though a punter has the option of taking the current price which I guess gives bookies further headaches.

 

Cheers.

[carcanaques 10]

Things appear to be quite different to the UK (hence my comment in the other thread about betting being far from zero sum, well at least here).

 

Is this all legislated in th US (how much a bookie can charge and how they set odds)? Lets say your taking bets on a match where the outcome can only be A wins or B wins if you only get $1 on A and $100 on B you would offer odds of 100 to 1 (or maybe a bit less to make your 'vig') In the UK the bookies can set their rate without restriction (as far as I know). What if a bookie can't unload all their risk as bets get taken? They are now in a vulnerable position no longer being win win? Seems reasonable for them to get paid to take this risk.

 

A side question are most bets in the USA settled at 'starting prices' thats the case in the UK though a punter has the option of taking the current price which I guess gives bookies further headaches.

 

Cheers.

 

Bookmaking is illegal in the US except in jurisdictions where it is legal and operated by a licensed casino. Most of those outfits charge 11 to 10 on all bets that involve a pointspread; for example, football, basketball. Moneyline wagers (betting on the winner straightup) have set odds for payouts, much like the horses and the bookmakers cut is built in to those odds and payouts.

[BlowFish 10]

Ahh OK that's pretty different - things make more sense now. In the UK the bookmakers will take a bet on just about anything and I guess for some things just have to make up a price on the spot with little chance of finding a counter party. Snow at Xmas is a popular one. And every now and then you read about a wierd one in the papers.

 

How does betting on horses work in the US? Obviously no spread there? Horses are probably the most popular for sport betting in the UK. There are still bookies on most high streets. I guess if they use starting prices (final odds given at race start) its easier to set 'fair' prices to a prescribed (and legislated) formula.

[aiki14 10]

Ahh OK that's pretty different - things make more sense now. In the UK the bookmakers will take a bet on just about anything and I guess for some things just have to make up a price on the spot with little chance of finding a counter party. Snow at Xmas is a popular one. And every now and then you read about a wierd one in the papers.

 

How does betting on horses work in the US? Obviously no spread there? Horses are probably the most popular for sport betting in the UK. There are still bookies on most high streets. I guess if they use starting prices (final odds given at race start) its easier to set 'fair' prices to a prescribed (and legislated) formula.

 

Betting on horses here is done by Pari Mutuel wagering

http://en.wikipedia.org/wiki/Parimutuel_betting

 

Bookies, or the legal Off Track betting add a surcharge on top, on payouts.

[BlowFish 10]

Thanks for the link. It just sounds as if things are more regulated in the USA. I may be mistaken about bookies being able to set there prices freely here of course. Pari Mutuel by definition uses starting prices I see.

 

Never been much of a gambler. I'll have a few quid on each race if I have a day at the races or might go to a casino for the odd night out but both of those are rare events, probably 500:1 against!

 

Cheers.

[Nick1984 10]

I'm glad that I don't place bets. If I was a bookie then it would be a great business to get into however we all know that the book making industry is run by the mafia in whatever country you're in, and the only way to get a bookies license is to know people who know people.

 

The Melbroune Cup is going to be run pretty soon (Horse Race). The Bookmakers are going to make a killing. I heard that on average a bookie at the track turns over about $200k per hour, from which he will pay out a substantial amount to the winner, but they can and do leave the day with a lot of profit in their pocket from the vigorish that carcanaques describes.

 

Messy business lol.

 

P.S: I wanna retain all my fingers, toes, and other appendages that I find usefull so I don't wanna make any bets that I can't afford!