Sportsbooks as any other business need to make money to stay alive. They do this by creating sports betting lines with odds that will slightly benefit them and give them a certain edge in terms of losers/winners ratio and at the same time will entice the players to bet on sports offered. Consider this, if the final result would be one in which 50% of players on any given game or event win, and the other 50% of players lose, this would mean that the bookie will have to take the losers money and pay out the winners, leaving no money for profit business. It is obvious that this model of business will not work; that’s why the odds need to be slightly set so there is a bigger amount of losers than winners. This is how the betting on sports business model works.
The term Vigorish (also known as ‘Vig‘, or sometimes referred as ‘Juice‘) is the betting odds that the sportsbook create to work with the probabilities. The Vigorish can be seen as a fee for playing it safe and betting on the favorite on a given sport. By common sense is expected that the sportsbook will be receiving more bets on this side of the game. On the other hand most bets on the underdog (the non-favorite team) don’t involve any Vigorish or juice, why? Simply because it is considered a riskier bet for the player, and he is actually helping the bookie’s odds by betting on this side of the game.
The best way to consider this is by using an example: Consider the Patriots are playing against the Broncos. The Patriots are the favorite team to win. Most common odds showing the Vigorish might look something like this: 110/90; what this mean is that for every $100 dollars you want to bet on the Patriots you get $90 if the bet is a win (plus your original $100of course). That difference of $10 dollars is how the bookie and the sportsbook make money and manage to keep a profitable business; this is how the bet on sports model would work. Something similar happens on the underdog side; using the same type of odds (110/90) the bettor will lay $100 dollars to win $110.
Another useful way the sportsbooks presents this to the players is: If you play the riskier bet (underdog) you would be making even more money than what you wagered. If go with the safe route (favorite) you make less return than even bet on the game.
Of course this not always means the sportsbook is safe from taking any loses, even though complex software and algorithms go into creating the most accurate lines that keep bets on both sides of the game (underdogs and favorites) even, things can change, that’s the beauty of betting on sports. There is times where the underdog has proven to come out victorious and the sportsbook has taken a higher amount of bets on this side, effectively causing the sportsbook to lose money.
Because of all these reason is of special importance to study the line and the public perception before betting on a game, if you are can spot a bad line and take advantage of it you might be able to take a few extra dollars from the sportsbooks mistake.