Why Only The Best Price Is Worth Your Money
May 22nd, 2011 - Posted by Andrew_Brocker in Betting Theory
bettingexpert blog editor. Always taking the alternative route to finding the value.
It goes by many names: the Juice, the Vig, the Margin, the Commission, The Take, The Percentage, The Cut, The Snitch, The Brick, The Handle (Ok, I admit, I just made up those last three) But whatever you want to call it, it's that slice of action every bookmaker takes out of the odds so as to make their business worth their while. And it varies from bookmaker to bookmaker and even from event to event with bookmakers offering special 'reduced juice' on particular leagues or tournaments to attract bettors, offering them higher odds and greater returns than at other competing bookmakers.
But what exactly is Juice? How do you calculate it? And what is the impact on your betting bank of the slightest reduction or increase in Juice?
Juicing the market
I once read on a forum a innocent poster suggest that bookmakers are 'risk takers', that the odds bookmakers offer are more a reflection of who the bookmaker thinks will win a particular contest and that in affect, bookmakers have a preferred winner in any given contest. Unfortunately for that particular forum poster, this understanding is only half true.
Yes, bookmakers might have a preferred winner in any given contest, but it's not in any way a result of favouring one side when framing the odds. And a risk taker is exactly what a bookmaker is not.
When framing odds for a particular event, bookmakers are attempting to compose odds that they think will attract betting on both sides of the market, therefore balancing the bookmakers liability given the possible outcomes. But if the bookmaker's liability is equal given any outcome, how does a bookmaker make a profit themselves? The answer is of course, the Juice.
Bookmakers take this slice of the full value of the odds offered, resulting in a profit, or 'commission' once their liability is balanced on either side of the odds. This is also known as the Theoretical Hold. In other words, it's the percentage of money taken from bettors that the bookmaker will claim should they balance their liability perfectly. And although it's unlikely that a bookmaker will achieve that perfectly balanced liability on each side of a specific event, by offering hundreds of markets each day on a wide range of sporting events, they can be confident that their overall liability will even out and they can take their cut of the money put down by bettors.
100% Juice
So what's an example of a juiced market. Well, the clearest example to offer is on so-called 'even money' events. This is where it is deemed by the bookmaker that both sides of the market will attract equal action from a betting public that considers each outcome as an even probability, 50-50.
So let's use the example of tossing a coin. We can expect that over enough tosses, it is 50% as likely that a coin will come up heads as it will tails. Now if they were offering a full market without any Juice, the odds would of course be an even 2.00 on both heads and tails. i.e. you bet 1.00 to win 1.00. This is what is known as a '100% market' or 'fair odds'. In other words, you're getting full value on your return. But bookmakers want their slice of the action. And so they offer us anywhere between 1.85 to 1.99 as 'even money.' They take out their percentage. This is the business.
Assessing the Market
As I said, a 100% Market is where 'fair odds' are being offered. It is where there is no advantage for either the bettor or the bookmaker. When the market is assessed as less than 100%, this places the advantage with the bettor, meaning there is greater value in the market than the probability of possible outcomes. And on the other hand, when the market is greater than 100%, as it typically is, this means there is less than full value in the market.
So how do we assess the market? Well, it's a fairly simple calculation. Firstly, we need to convert the decimal odds to the percentage probabilities that they represent. So let's take an example, the odds of 1.65. We convert these odds simply as 1 divided by 1.65 which equals 0.606. We do this for each possible outcome in the event, add them together, then multiply that by 100 and we get the market percentage also known as the 'overound'.
Here's an example. Let's take a football game, with 3 outcomes - either team wins or there is a draw.
Team 1 odds – 2.00
Team 2 odds – 3.90
Draw odds – 3.50
We make our conversions and we get -
Team 1 probability – 1 div 2.00 = 0.500
Team 2 probability – 1 div 3.90 = 0.256
Draw probability – 1 div 3.50 = 0.286
Total = 1.042
Overround = 104.2%
Calculating the Juice
There are a number of ways to calculate the Juice on specific odds. My preferred way is the following:
So let's take our example of the football game further to calcute the juice.
(1 – (1/1.042)) * 100
(1 – 0.96) * 100 = 4%
So the odds for that particular football game have been Juiced 4%.
Of course, you’re not going to want to have to do this each and every time you wish to make a bet, especially if you’re trying to calculate the value in a horse racing market of 12 or so runners. Fortunately, betting exchanges such as Betfair display the Overound on each market. There are also a number of calculators on the web that will do it for you. The calculator offered here by Pinnacle Sports is the best of them.
Who pays for Juice?
There are two schools of thought here. The first is that the losers pay. The reasoning here is that the winner not only claims the money he originally put down, but also a certain percentage of the losers money, with the remainder of the losers money going to the bookmaker. The second school of thought is that the winners pay. The reasoning here is that the winner doesn't receive the full value return for the money they originally placed on the bet.
This reasoning extends further to suggest that the more you win, the more juice you will pay. For example, if I win 50% of 100 single unit bets at odds of 1.90, I will pay 5% juice. (or Average Juice). But let's say I win 80% of my bets. Well, in this case, if I were betting with fair odds of 2.00 winning 80 of 100 would give me a return of 160. But with odds of 1.90, I gain a return of 152, which is 8 less than 160. I pay a commission then of 8 units for a total of 100 units bet, leaving me to pay 8% rather than 5% juice. In other words, this reasoning suggests that the more you win, the more commission you pay to your bookmaker.
What's the price of Juice?
We hopefully now have an understanding of what juice is. Let's then have a look at the value of shopping around for the best value markets. We'll do this via a simple comparison of various 'even money' odds and see the impact a slight reduction or increase in juice can have on your betting bank. He we bet 100 bets at varying 'even money' odds.
We can see here that the difference between betting on a market with Juice of 2.5% and 5% results in 2.75% greater return. And when we are talking slight percentages between being a successful bettor and a failing bettor, assessing the Juice in the markets you choose to bet on is so very crucial. And that's winning at a 55% rate on 'even money' odds. Let's consider the what impact a reduction of Juice can have on a 53% winning strike rate.You can see here that the impact is significant. With just 2.5% Juice, a 53% strike rate on 100 'even money' bets will gather a return of 3.35%. But with 5% Juice, the return is just 0.7%.
Consider this chart below. Starting with a bank of 1000, we will bet a unit of 1% of our increasing bank on each bet and will complete 1000 bets. We are betting 'even money' bets and hitting a strike rate of 53%. Over the course of those 1000 bets, the difference between 'even money' with 2.5% and 5% Juice is immense. After 1000 bets, betting with 2.5% Juice, our bank has grown to 1397, a return of 39.7% while betting with 5%, sees our bank rise to just 1072, a return of 7.2%.
Find your markets
While the conclusion is obvious, that it is far more beneficial to bet with bookmakers who offer better value markets, it's something that many novice bettors don't quite understand the full implications of. And with our ability now with online betting to play one bookmakers odds off against another, the opportunity to reduce our juice is greater than ever, particularly with the advent of betting exchanges. It may seem like a slight percentage, and it may seem like the difference between a 1.90 even money offer is only 5 cents less than a 1.95 offer, but over the long run it makes a huge difference to your overall chances of success as a sports bettor.
If you liked this article you might also like:
How to convert odds to their implied probability
How do you find betting value?
How does randomness impact upon our betting?
Why are fewer goals scored at the end of the Premiership season?
Why do prices drop on favourites and the over close to kickoff?
Related posts
-
May 18th, 2013Why Does Pinnacle Sports Welcome Winners?
Why does Pinnacle Sports have a policy of welcoming winning punters and how...
Full blog post -
May 16th, 2013Talking Betting With......Rory Jiwani
What's it like working behind the scenes at a popular bookmaker? How do boo...
Full blog post -
May 15th, 2013How To Avoid Betting Account Restrictions
What can you do if your betting account is restricted? How can you avoid ha...
Full blog post -
May 9th, 2013Bookmaker Terms & Conditions: As Hard To Read As Nietzsche
The average bettingexpert user is active at over 4 bookmakers. This means t...
Full blog post
You must be logged in to post a comment! Sign up + or log in in the top right corner.
a live chat ability would certainly be of great value, looking forward to it becoming a reality real soon.
Yes, it has become increasingly difficult (often impossible) to sneak these past the bookies. When I say correlated it usually has to be the same event, yes. An example could be betting on the Under and the underdog in soccer, since a low scoreline tends to be more likely an upset than a game with plenty of goals. @Thomas: won't be on the blog, part of another bigger project.
Thanks for the feedback guys. Appreciate it. @Joachim, when you refer to correlated parlays, youre referring to situations where you can place a multi-bet on multiple outcomes within the one event? Those can be hard to find. Most bookmakers are very strict on that sort of thing. I do however currently have one on this season of Australian Rules Football. The particular bookmaker somehow allowed it. Immense value.
Joachim it sounds like your onto something there looking forward to reading that.... @ Thomas I will get an email out to you real soon..
Cool! Looking forward to that analysis, Joachim. Will it be on the blog, or will it be part in another project to be revealed?
@profitt: In general you are right, but there are some scenat´rios where multiples are actually better. For example always when you can multiply value instead of merely adding it, and especially when you hit the holy grail of betting, correlated parlays. I'll publish an extended article about the subject matter soon myself on this site, once the redesign process has finished.
@ZeljkoM: I disagree. It's always the loser who pays, since that is where the flow of money comes from. Betfair collects the money from the loser, deducts the commission, and gives the rest to the winner. The winner doesn't really pay because a)if there is no loser, there is nothing to win b)if Betfair doesn't take its cut, which the loser has to pay for, there is no platform for you to bet on. The winner simply has to share his winnings, but these are being paid for by the loser. The same logic applies to the way bookmakers operate. If there are no losers, there are no bookmakers/exchanges, and by extension winners. Someone has to pay the tab, and it's just not the winners - even if they feel like that sometimes. The infamous Betfair Premium basically validates that Betfair shares my point of view.
The commission is much bigger when placing multiple bets, so in this article you can find another good explanation why you should place only single bets.
Good point ZeljkoM. Looking at the Betting Exchanges (Betfair, Betdaq) might be the most transparent way to see who pay for what.
very good article, and I stick with school that says that winner pays the juice, look at betfair - juice (5% or less) is taken from your account only if you win :)
Hello TheGame, Happy that the community is helping you become a better punter! I like the idea about live chat. I'd really like to develop a good live section, so please do send me an email with your thoughts - thomas AT bettingexpert.com. One little but, though: Our developer queue is super long right now, so it takes quite a while to implement new ideas. And I agree, Andrew is doing a great job here!
brilliant article as usual Andrew, thanks.
@ thomas just to say you are doing a brilliant job here and u Andrew posting material of this quality. I have been apart of the be community for a few weeks now and it has totally changed my outlook to sports betting learning hiw to punt wisely now I'd like to help others with good picks. Just had a though @ Thomas have you guys thought about adding like a live feed chat allowing live user interaction with regards to In Play betting, solid tips in play can be priceless at times and may have the potential to take this already amazing concept to another level. I have already thought up some of the logistics of how something like this could work, its something i have put abit of though into this already and am happy to share my ideas drop me a comment if wish to discuss. Keep up the good work guys
really good article here thanks........
This post is amazing. It is kinda crazy that people keep playing at bookmakers with so high margin. I am not necessarily talking about the big online bookies here, but more the "old" national bookmakers who have or used to have monopolies. Thank you for putting this issue in the spotlight!
| 
|
Come to think of it, it may be said as a commission but you are right winners also pay. If they don't pay as well they should have received the whole amount of winnings. Nicely said