A sportsbook does not need to predict games well to make money. It needs to price both sides so that the implied probabilities add up to more than 100 percent. That surplus is the vig, also called the overround or the juice, and it is the house's structural advantage.
The arithmetic
A price of -110 implies a probability of 52.38 percent. Put -110 on both sides of a market and the implied probabilities sum to 104.76 percent. That extra 4.76 percentage points is the overround. The book's hold — the share of every dollar wagered it expects to keep with balanced action — is 1 minus 1 divided by the overround, or about 4.55 percent.
| Both sides priced at | Sum of implied probability | Book hold |
|---|---|---|
| -105 / -105 | 102.44% | 2.38% |
| -110 / -110 | 104.76% | 4.55% |
| -115 / -115 | 107.00% | 6.54% |
| -120 / -120 | 109.09% | 8.33% |
The practical consequence is that a coin flip priced at -110 on both sides is a losing proposition. You need to win about 52.4 percent of those bets simply to break even, and every point of hold above that raises the bar further.
Note
Hold is not the same as the book's actual profit margin. It is what the book keeps if money lands evenly on both sides, which in practice it rarely does.
This is why the first step in evaluating any price is removing the vig. Until you do, you are comparing your estimate against a number that has the book's margin baked into it.