Juice In Sports Betting
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|‣||What Is Juice In Sports Betting|
|‣||How To Calculate Juice|
|‣||How To Calculate True Probablity|
Sportsbooks are huge moneymakers; that’s an indisputable fact. However, this leaves many to wonder how sportsbooks guarantee themselves massive profits, especially when you consider the fact that sports betting is vastly unpredictable and volatile.
The primary way that sportsbooks do this is through juice. If you’ve never heard of the term juice or have but don’t know what it is, here’s an in-depth explainer of how sportsbooks make their money.
What Exactly Is Juice In Sports Betting?
Juice is the commission that sportsbooks charge for taking your wager. However, the juice is never charged separately like other commission fees, but sportsbooks always include it in the odds that they offer you.
To understand juice, you need to understand sportsbooks operate in sly ways. When they offer odds to you, they never give you the true odds of an event. Instead, bookies offer you unfair odds.
Take this simple example: If your friend were to offer you a bet on a coin toss, they’d give you odds reflective of the probability, i.e., a 50/50 chance of the coin landing on either heads or tails. So if you bet your friend that the coin will land on heads, you stand to win $100, a simple, fair exchange.
Sportsbooks, however, have to include their cut so that they can profit from this exchange; this means that whether you win or lose your bet, the book still makes money.
So if they were the ones offering you the above coin toss wager, you’d find that instead of risking $100 to win $100, a sportsbook would make you risk $110 to win $100, even though the probability of the coin landing on either heads or tails hasn’t changed from the initial 50/50 chance.
The additional $10 charge in such an example can be referred to as the juice.
Juice also commonly goes by the name vigorish or the vig.
Example Of Juice In Sports Betting
The easiest way to spot juice is on point spread bets and game totals. In both, you’ll see that the odds on either side are always -110. Take the following example:
Tampa Bay Buccaneers +4.5 (-110)
Kansas City Chiefs -4.5 (-110)
The NFL betting odds (-110) clearly show you the vig. Any bettor who wants to win $100 on either side of the bet needs to risk $110, so the additional $10 roughly translates to a 10% cut.
If the books were fair and wanted to offer you odds reflective of the probability, the odds would be +100. But in that case, the sportsbook wouldn’t be guaranteed a slice of the cake.
Because juice guarantees a profit, sportsbooks ideally prefer the betting action to be balanced or as close to balanced as possible. If they take an equal number of bets on each side, then they don’t have to worry about one side carrying more risk than the other.
In the example above, if a large majority of the bettors sided with the Bucs, the book would react by either altering the spread to 3.5 or 2.5 or decreasing the Bucs’ odds to encourage more action on the Chiefs.
By doing so, the sportsbook aims to even out their risk so that they can profit regardless of the result.
Some books also take larger cuts. It’s not unprecedented to see odds of -115 or -120 on both sides of a bet, especially props. In such a case, the commission that the book takes is between 15%-20%.
If the sportsbook accepts hundreds—or even thousands—of such bets, their commission can easily add up to massive profit.
How Can I Calculate Juice?
Calculating juice can show you how much the sportsbook is profiting from your bet. Some online calculators may simplify this process for you, but for those who like tinkering with formulas, we will show you how to calculate juice.
Let’s try and calculate the juice for the above Chiefs vs. Buccaneers game.
We first need to get the implied probability of both teams. Note that implied probability is different from actual probability; implied probability is simply the probability implied by the odds given by the sportsbook, which often exceeds 100% when combined.
On the other hand, any event in the real world always has a combined probability of 100%.
To get the implied probability of the underdogs, or any odds with a positive sign, use the formula below:
(100/(Positive odds + 100) X 100)
On the other hand, to get the implied probability of the favorites, or any odds with a negative sign, use the formula below:
(Negative odds/(Negative odds + 100) X 100)
When calculating the latter, always drop the negative symbol first. In our case, both teams have the same odds, which are negative. So the implied probability for both teams will be:
110÷(110 + 100) X 100 = 52.4%
As per the odds, both teams have an implied probability of 52.4%. When you add these two probabilities up, you get 104.8%.
Since the event has an actual probability of 100%, we subtract 100 from the above.
104.8 -100= 4.8%
So in our Chiefs vs. Buccaneer’s example, the bookies have a hold of 4.8%.
If you place all your bets using the above odds, you’d need to win 52.4% of your wagers to balance your books, not the 50% that many people think. A winning percentage greater than 52.4% equates to profit.
If all these formulas sound too confusing, you can always just opt for an online calculator.
Juice In Other Types Of Bets
The vig is clearly evident in spreads and totals, but that doesn’t mean that it isn’t incorporated into other bets.
Moneyline bets rarely have the same odds, so you might be wondering whether such bets still have juice included.
Bookies can’t let go of any potential profit, so they include juice in moneyline bets as well. In this case, you’ll find that the juice is the difference between both moneylines.
Let’s take the following NHL odds:
New York Islanders – (+350)
Edmonton Oilers – (-460)
Islanders’ implied probability is 22.22%, while the Oilers have a massive implied probability of 82.14%. This adds up to 104.36%.
So in this moneyline bet between the Islanders and the Oilers, the book has a 4.36% hold.
Juice is also found in future bets. When you calculate the implied probability of all the selections and add them up, you’ll always get a value that is greater than 100%.
Calculating True Probability By Removing Juice
If you want to remove the juice to see the actual probability of an event, the steps to do so are straightforward. Just stick to the following:
- Calculate the implied probability of each team/event.
- Add the implied probability of all events.
- Divide each event’s implied probability by the sum of the implied probabilities.
- When you add them up, the total should be 100%.
Let’s go back to our above Chiefs vs. Buccaneer’s example.
We’d already completed steps 1 and 2, so we’ll continue from there.
Bucs’ implied probability = 52.4%
Chiefs’ implied probability = 52.4%
Sum of probabilities = 104.8%
Each event’s actual probability = 52.4/104.8 = 50%
Since the odds were similar in this example, when you add the true probability of both events, you get 100%.
Pros Of Reduced Juice
Reduced juice means that a book has less hold on an event; therefore, since they aren’t taking a huge commission on such an event, you get better odds by default.
So you might find that both sides of a point spread have odds of -105 instead of -110, which ends up being massively advantageous to you.
Betting with reduced juice has become favored by many bettors because of its advantages. Some of these are:
- You wager less than before. For example, instead of betting $1100 to win $1000 on odds of -110, you can wager $1050 at odds of -105 to win the same amount as before.
- It improves your return on investment.
- It lowers your risk in the long run.
Knowing how sportsbooks make money can help you find extra ways of capitalizing on profit. Since the juice is the primary way that sportsbooks earn money from bettors, you can look for books with reduced juice offers as this will help you earn more and risk less in the long run.
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