Bookie Edge: How to Calculate Overrounds

If you already know a thing or two about sports betting, then there’s a good chance that you’ve heard of overround, but what is overround? How do we calculate overround? Why is overround important for bettors?

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Lucky for you, we answer all those questions below. If you want to gain an edge over the bookmakers (who doesn’t!?), be sure to make full use of all the information on this page.

What is Overround?

The term “overround” represents the total value of all odds associated with the result of a singular event. Its primary objective is to establish a profit margin for bookmakers, securing their profitability irrespective of the event’s final outcome.

As a result, overround holds significant importance in the bookmaking industry, as it skews market prices predominantly in favor of bookies. The process ensures that bookies remain profitable even when all variables relating to an event are evenly balanced.

At the end of the day, bookies have one main aim – to generate profit. Overrounds ensure profitability and mitigate significant losses, but there is a way for bettors to use overrounds to their advantage.

How to Calculate Implied Probability

How to Calculate Overrounds

In order to calculate overround, you need to gather up all the possible outcomes from a betting market and combine the price probabilities to find the overround percentage. This will typically be slightly higher than 100%.

When you combine all the odds for a particular event, a predefined margin leads to an additional percentage. This is how bookmakers can gain an edge and ensure profitability over time.

For example:

Let’s say you’re betting on a soccer match. The home team is priced at +140 to win, meaning the implied probability is 41.7%. The away team is priced at +240 (29.4%), while the bookies have priced the draw at +220 (31.2%).

If you add up all the implied probability percentages, you get 102.3%. The prices and the implied probabilities give the bookmaker an overround of 2.3%, which guarantees the bookie a profit, regardless of the final outcome of the match as long as they get even action on the three legs of this betting market.