ELI5- sports betting


Trying to educate myself.
The vig
The spread etc…

In: 1

I don’t know what country you live in, but in the UK the richest woman in the country is billionaire Denise Coates, who is the owner of bet365, the sports betting company.

That tells you all you need to know about sports betting. The person who owns the biggest sports betting company in the UK is a billionaire.

If you get involved in sports betting, you are making an easy buck for the owners of the company. You might win a little time to time, but you will over time lose a lot.

It would be hard to get all the sports betting terms into one post.

Over/under is a bet made on a total amount of points in a game. Basically you are betting that the total score will be more or less than a number.

The vig is like interest on a loan. If you borrow money from a loan shark you might have a weekly vig that you have to pay along with the principal.

The spread is a betting function to even out the odds of a winner. If one team is likely to win, or is getting a lot more money bet at it, the spread will even the odds so more people bet on the other team. A spread of -7 in football for example would mean that if you bet on the team they would have to win the game by more than 7 points for you to win the bet.

Over/under is pretty self explanatory, you’re betting that the score will be above or below a certain number. It’s usually put at a half point to avoid ties.

The spread is more conceptual. For a sports book to make the most money the bets have to be the same on each side. To accomplish that they usually have you make a bet where one team will be awarded extra points for the purposes of the bet. So if the spread is some team minus four, you aren’t betting whether that that team will win, you’re betting whether that team will win by at least 4 points. For positive spreads your spotting that team extra points, a team whose plus six will have 6 extra points awarded for the purposes of the bet.

Sportsbooks are quite good at analysis and hire smart people for that, but they do sometimes get it wrong. So they compare it to the bets coming in. If they initially have a spread of minus thirteen for some team but still have 80 percent of bets taking that team they may widen the spread, say to minus 18, to try and get the bets on each side to balance out, but you’re locked in for what it was when you placed the bet.

To understand how sports betting is structured, let’s start with the *vigorish*, or ‘vig’. The vig is basically a fee you pay to the casino (for the purpose of this explanation just assume all bets are placed with casinos. The rules work the same regardless) for placing the bet. For example: Say you want to bet $100 on the Blue Team vs. Red Team upcoming sports match. In reality you’ll actually have to give the casino something like $110 (10% vig) in order to place the bet. If your team wins, you get your $110 dollars back plus the $100 bet for picking the winning team. If your team loses, the casino keeps the $110 dollars.

Here’s the key factor: **The vig is how casinos make their profit.** They don’t care so much about the outcome of any particular game so much as they care about attracting an equal number of bets on each team. That way, no matter who wins the game, the casino makes a profit because for every $100 victory bet they have to pay out they have a $110 losing bet they keep, representing a $10 profit.

Now that we’ve established how casinos make their profits, we can understand the purpose of point spreads, over/unders, moneylines, etc. Each of these represent a tool the casino uses in order to attract an equal number of bets for each outcome.

Let’s start with point spreads. Let’s say in the case above of Blue Team vs. Red Team, the Blue Team is much better than the Red Team; the Blue Team is full of all-pro level players while the Red Team just has a bunch of scrubs. Obviously, the Blue Team is much more likely to win so most bettors would naturally gravitate toward betting on the Blue Team. As explained above, casinos want an equal number of bets on both sides to guarantee a profit.

In order to counteract this and achieve the goal of equal action on both sides, the casinos says that in order for bets on the Blue Team to win, it not only has to beat the Red Team but has to beat them by at least a certain number of points (or goals, runs, or whatever method of scoring the particular sport uses). So the casino sets a **point spread** of say, Blue Team -5 / Red Team +5. This means if the final score was something like Blue 15, Red 12, a bet on the Blue Team would still lose because they only beat the Red team by 3 points instead of the required 5 or more. Conversely, a bet on the Red Team would win since even though they lost the game they didn’t lose by more than 5. The casino uses a bunch of math algorithms to determine the point spread amount that will attract an equal amount of bets on each team.

(Couple of notes – 1. In the example above of a +5/-5 point spread, if the Blue Team beats the Red Team by exactly 5 points the outcome is considered a *push*, and the bet is cancelled and you get the money you wagered returned to you. Which leads to 2. – point spreads and over/unders are often represented by non-whole numbers like 5.5 so that a push cannot occur. However sometimes the formulas tell the casinos to make the spread or over/under a whole number anyway.)

Say however you just want to place a bet on a team winning and don’t want to worry about how much the final score is – just that your team wins. Casinos will allow you to do this, but the catch is that if the team you want to bet on is a lot better than the team it’s playing, you’re going to have to wager a lot more to get even a modest payoff – you might have to bet $200, $300, or even more for every $100 you’ll win if the team you bet on wins. But remember, casinos always want to attract an equal amount of bets on each team, so in order to attract bets on the less-skilled team they make the payout much more, say $200 for every $100 you bet.

This payout structure is called the **moneyline**. It’s something like -150/+130, -105/+100, -500/+400, etc. The negative number is the amount you need to bet on the stronger team in order to win $100. The positive number is how much a $100 wager will win if you bet on the weaker team. So in the case of -150/+130, if you bet on the stronger team you’ll need to bet $150 in order to win $100, while a $100 bet on the weaker team will win $130 if that team wins the game.

You probably noticed that if you add up the two numbers for each moneyline they always result in a negative number. This difference is the casino’s vig (and therefore profit).

An **over/under** is just a wager on some countable statistic that will occur as a result of the game between two teams. The most common over/under is total point, but it can be pretty much any countable statistic: points, yards, assists, penalties, really anything. You place a bet on whether or not you think the total points scored will be greater or less than the over/under and if you’re correct you win your bet. Like a point spread, the over/under is set to attract an equal number of bets on each side, and the vig is the same (most commonly 10%) regardless of whether you bet the over or under.

Hope this helps!