Experts suggest that 30% to 40% of the worldwide gambling market consists of bets made on sports. When you consider that the size of the worldwide gambling market is close to $40 billion, that’s a huge chunk of change—between $12 billion and $16 billion.
For such a large hobby, you’d think people would have a better grasp on the facts of how the sports betting hobby works as both a business and as a pastime.
Yet, you’ll find all kinds of misinformation and misunderstandings on the web about how sports betting really works. Not all the people sharing this misinformation have your best interest at heart, either—even though they claim that they do.
This post is aimed at newcomers to sports betting, but it’s also aimed at people who have been participating in the hobby for a while and want to know the real deal when it comes to betting on sports.
Let’s Start the Conversation by Discussing “Vigorish”
If you bet $100 straight up with the guy sitting in the cubicle next to you on this weekend’s Cowboys game, you’re not paying any kind of “vigorish.” You just have a friendly wager. Chances are that neither of you are engaged in sports betting as a business.
But when you place a wager with a professional—someone who takes sports bets as a business—you’ll always face the “vigorish.” You’ll often see the word abbreviated as “vig.”
But what is it?
Think about how casinos make their money from casino games. All the games have a mathematical edge over the player. The payout odds aren’t commensurate with the odds of winning. If you’re making an even-money wager, you should understand that you don’t have a 50/50 chance of winning.
That mathematical edge is where the casino earns its money. It’s called “the house edge.”
Poker is another profit center for casinos, but since players are competing with each other rather than the casino, the casinos must find another way to profit from offering the game. They do this by taking a small percentage of each pot (usually 5%). This is called “the rake.”
In sports betting, the people taking the action (the “bookmakers”) make their money by having you risk more money than you win according to the odds.
These are examples that use contests which you have a 50/50 chance of winning. If one team is a big favorite over another, the book will use a “line” to handicap one of the teams. Their hope is that 50% of the action will fall on each side of the event.
When that happens, the book is able to pay off the winners with the money from the losers.
But since the losers lost $110, and the winners won $100, the book makes a profit.
What Does This Do to Your Bankroll Over Time?
If you assume that you’re not an expert handicapper or that you just bet randomly on various teams with no thought to their chance of winning, you’ll eventually lose all your money. After all, since you’re losing more money every time you lose than you win every time you win, your eventual results will be negative.
Let’s say you have a bankroll of $1100, and you place bets of $110 on 10 different football games one week. You win 5 of those bets, and you lose 5 of those bets.
For the 5 bets you win, you get your money back plus a profit of $500, for a total of $1050. You get nothing back for the bets you lost, so your loss for the week is $50.
If you lose $50 per week for 22 weeks in a row, you’ll run out of money.
That’s how the vig works if you just pick winners 50% of the time.
If you want to achieve a break-even record, you need to win about 52% of the time.
Here’s how that works:
You start with $110,000, and you place 100 bets. You’re betting $1100 on each game. If you win 52 of those bets, you get your $1100 on each of them back plus $1000 in winnings. And of course, you get nothing back on the 48 bets you lost.
That’s $109,200 in winnings. Since you started with $110,000, you’ve still lost a small amount of money, but you’re running close to break even.
Assume a 53% winning percentage instead.
Now you’re looking at $110,300 after you settle up, which is a small profit of $300.
The break-even point, therefore, is somewhere between 52% and 53%.
The higher you can get your win percentage over 53%, the better your return on investment (ROI) will be.
So what does the vig do to your bankroll over time?
- Assuming you’re winning 50% of the time or less, it transfers your money to the sports book.
- Assuming you’re winning 53% of the time or more, it transfers the book’s money to you.
What about Games Where the Odds Aren’t 50/50?
Some sporting events don’t use the whole “risk $110 to win $100” model. They instead offer odds on the favorite and on the underdog. There’s always a disparity between these odds that simulates the effect of the vig, though.
Some sports books always list “American odds.” This is when the amount you win or lose is based on its relation to $100. When the American odds are listed with a -, this is the amount you must risk to win $100. If they’re listed with a +, this is the amount you win if you risk $100.
Here’s an example from a popular sports betting site on one of today’s baseball games:
- Seattle Mariners +166
- New York Yankees -192
In this game, if you bet $192, you can win $100 by betting on the Yankees. Obviously, they’re a huge favorite, as you must bet almost twice as much as you’re going to win.
If you bet $100 on the Seattle Mariners and they win, you get your $100 back along with $166 in profit.
If this were a “mathematically fair” bet, you’d break even if you bet on each side of the game.
But that’s not the case. The difference is the vig, and that’s where the sports book makes its money.
Other sports books use “decimal odds.” (This is most common in Europe.) Decimal odds simply show you the total amount you get back from the book if you win your bet. It’s a factor.
You simply multiply your initial stake by the decimal odds to see what you’d get back when you place that bet and win. This amount includes the amount of the wager you’ve made, by the way.
The decimal odds for the baseball game listed above look like this:
- Seattle Mariners 2.66
- New York Yankees 1.52
If you bet $100 on the Mariners, you’d get $266 returned to you if you win—your original stake of $100 plus $166 in winnings.
If you bet $100 on the New York Yankees and win, you’d get $152 returned to you if you win—your original stake of $100 plus $52 in winnings.
But this doesn’t mean you’re required to bet $100. You can bet any amount—the odds are a multiple applied to whatever amount you bet.
In these cases, you’re not risking $110 to win $100. You do that when there’s a handicap in place—when a team has to win by a certain number of points to win the bet.
With decimal odds and American odds, the status of the favorite and the underdog is “baked into” the payouts themselves.
Look at what happens in this game if you bet $100 on both sides.
- If the Mariners win, you win $266 total, but you also lose $100 on the losing bet. So your net win is $66.
- If the Yankees win, you win $152 total, but you also lose $100 on the losing bet. So your net win is $52.
The difference between that $66 and that $52 is where the sports book earns its money.
How Hard Is to Become a Professional Sports Bettor?
The short answer?
Harder than you think.
But it’s not impossible. In fact, in Mason Malmuth’s and David Sklansky’s book, How to Make $100,000 a Year Gambling for a Living, the authors suggest that sports betting is the most profitable gambling activity for gambling pros.
But what does it actually take to bet sports professionally?
The main 3 things you need are:
- 1. A thorough understanding of and expertise in the sports you’re betting on,
- 2. A thorough understanding of and expertise in how the math behind sports betting works,
- 3. And a bankroll sufficiently large to avoid going broke because of bad luck.
In fact, you need to know so much about the sport you’re betting on that you can get an edge over the bookmaker. That’s a trick in and of itself. I’m not sure you could pull off that kind of expertise with multiple sports. It’s probably best to start by specializing in a single sport that you love.
You’ll need to have a more thorough understanding of the game than anyone else you know. You’ll also need to find ways to get information that other bettors don’t have before they can get their hands on that information.
Also, if you don’t understand how the math works—how to calculate return on investment (ROI), for example—you can’t succeed as a sports bettor. The concepts aren’t that complicated, but you need to understand them backwards, forwards, and inside out.
Finally, I can’t say enough about how important it is that you’re sufficiently bankrolled. Yes, you’re going to live on the money you’re earning by winning at sports betting.
But your bankroll is the fuel that keeps those returns going. If you lose your bankroll, you can’t maintain anything like a professional sports betting career.
This means that you can’t afford to risk huge chunks of your bankroll on single bets. You must use small amounts of your bankroll on individual bets in order to spread the money around and avoid a devastating unlucky loss.
I don’t care which sport you specialize in. There’s an upset every day or every week. That’s just how sports betting works, no matter how insightful you are.
How you get the information you need to get an edge is the subject of other blog posts here. How to thoroughly understand the math behind sports betting is also covered in detail also on this site.
Realistically speaking, you’ll probably never achieve a winning percentage much higher than 55%. That’s what the elite in sports betting accomplish. You’ll see tout services brag about better results than this, but you can’t believe that nonsense. They’re trying to sell you something, after all.
But with a large enough bankroll, that kind of ROI can turn into big money really fast. It’s comparable to compound interest, but instead of compounding year over year, you’re compounding your money week over week—or if you’re a baseball bettor, day over day.
If I Could Give You Only One Piece of Advice
Shopping the best lines and the lowest vig books is the difference between the men and the boys when it comes to long-term sports betting results. It’s hard to overstate what a big difference betting $105 to win $100 makes when compared to betting $110 or $120 to win $100.
Luckily, with the rise of internet sports books, you have plenty of competition to choose from. And with the latest Supreme Court decision, sports betting will soon be legal in a lot of states, too.
What that means is you’ll have lots of choices when deciding where to take your action. Shop around for the best lines. I’ve read multiple authors suggest that line shopping might be the most important aspect of professional sports betting.
When most people talk about sports betting, they’re talking about placing bets with a bookie rather than with an individual. Most people can’t make a profit, in the long run, betting on sports because of the vig, which is the commission the sports book charges on the bets.
But if, through a combination of expertise and advanced information unavailable to other people, you can increase your win percentage to between 53% and 55%, you can have a lucrative career betting on sports. You need a big bankroll to pull that off, too.
Finally, shop around and find the lowest vig that you can. With a low vig, you can be wrong more often and still make a profit. You can also see a higher ROI with the same winning percentage if the vig is low enough.