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A
CRASH COURSE IN VIGORISH Who
Pays?...How Much? /// 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 battleworn veterans who flatly
answer "Fourandahalf 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.
In
the last several years, the word Vigorish was added to the Webster’s
dictionary as a proper noun. Until then, it wouldn’t pass the spell check.
Its origin is from the French word "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 at traditional bookmakers, for every $10 a bettor wants to win he is required to risk $11  to
"lay" $11. (Many internet bookmakers used to charge less,
allowing bettors to risk as little as 10.5 to win 10, but now they often
charge morefor our purposes here we will use '1110' bets.) These
'eleventen' 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 'evenmoney' proposition (red or
black, high or low, odd or even) and losing, loses his bet, whatever he
risked, period. But someone winning an 'evenmoney'
roulette proposition does not get paid the 'fair' odds of 10to9. (There are
20 ways to lose an evenmoney bet at roulette and only 18 ways to win. The
odds are 109 against you.) The winner only gets paid 1to1 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 12to10 is a oneway
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 1110 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 0100 loser
would have played for 'free' while the 1000 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 1110 bets typically pay more than 5 percent in vigorish. Related articles: /// 
