Sports Betting and House Edge

By John Grochowski on Wednesday August 22, 2018

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In a previous entry discussing the point spread, over/under and money line wagers at sports books, I mentioned that the house typically charges an extra 10 percent on point-spread and over/under bets. To win $10, you must bet $11.

Bettors are sometimes misled into thinking that gives the house a 10 percent edge, which would be very high casino standards.

Actually, the house edge is 4.55 percent. Here’s how it works:

Let’s say you and I each bet $11 on opposite sides of a game. Between us, we risk $22. The winner gets his $11 back plus $10 in winnings, for a total of $21.

The house keeps $1. Divide that house profit by the $22 risked, then multiply by 100 to convert to percent, and you get 4.55 percent.

Oddsmakers set the spread to attract bettors to both sides of the wager. As long as somewhere close to the same amount of money is attracted on each side, the house is guaranteed a profit. That make the spread not so much a prediction of what will happen in the game, but a reflection of bettor behavior.

Winning half your bets will not break even, it will leave you 4.55 percent in the red.

How successful at predicting games do you have to be to make a profit? The break-even point is just under 52.4 percent.

If I make 1,000 bets at $10 each, then with the 10 percent vig, I bet $11,000. If I win 524 bets, I keep the $5,764 I’ve risked on the winners, and collect $5,240 in winnings. That gives me $11,004, or a $4 profit per $11,000 risked at a 52.4-percent success rate.

A 52.4-percent win rate might not sound like too steep a hill to climb, but longtime sports bettors will tell you it’s harder than it sounds. If it was easy, sports books would either go out of business or charge a steeper vig.