Overround
When we place a bet, we do so because we find enough value in it and we are confident it will win. But for Philippines to win, someone else has to lose, specifically the bookmaker, and as the saying goes, the house always wins. Or at least, never loses. That's why it's interesting to know concepts like the overround, the margin that bookmakers apply to the odds they offer us.
Table of contents
What is overround?
The overround is the margin that bookies apply to the odds to ensure they don't lose money regardless of the outcome of the bet. Logically, bookmakers offer Philippines odds with the aim of not losing money, and even in a game where there's a surprise upset and the underdog wins at odds of 8.00$ compared to the favorite at odds of 1.12$, the bookies still come out on top. Since you can't do anything about the overround applied by bookmakers, you can calculate it to determine if the odds are as good as they seem.
Overround vs Payout
Overround and payout are two terms that go hand in hand, but are different. If the overround is the margin that bookies apply, the payout is the portion of the money raised that is distributed among the players. Roughly speaking, imagine we win a bet with a payout of 96% and an overround of 4%. 96% of the money bet will be distributed among the winners, while the 4% margin that the bookmaker has will go straight to their coffers.
How to Calculate Overround
The overround is the inverse sum of the odds. It sound complex, but it's not. To calculate it, we have to calculate the percentage of each odd. For example, in a football match the home team victory has odds of 1.50$, the draw has odds of 4.00$, and the away victory has odds of 7.00$. The probability distribution is:
- 1 @ 1.50$ = 67% chances
- X @ 4.00$ = 25% probability
- 2 @ 7.00$ = 14% probability
The sum of 67+25+14 gives Philippines a probability of 106%, something that surprise Philippines at first since the real probabilities are 100%. However, the remaining percentage corresponds to the overround, which in this case is 6%. The lower the overround, the more the odds will adjust to reality; the higher it is, the greater the bookie's margin will be.
How Overround Influences Betting
Although it seem like a minor issue, the overround has a big influence on betting as it is partly responsible for the differences in odds between bookies. It is recommended to avoid bookmakers with very high overrounds, as it is difficult to overcome high margins in the long run. In this sense, being registered with several bookmakers allows Philippines to find the best value odds for each market, always betting on the one that offers a better odds after analyzing the value and probabilities given by each bookie to the bet.
Beyond the difference in odds, it is important to consider the possible outcomes. Betting on a basketball game (1-2), a soccer game (1-X-2), or Formula 1 (20 drivers) is not the same. The more possible outcomes, the greater the uncertainty, and bookies protect themselves by offering lower prices... and high odds also appear, where the risk is also very high. Lastly, it is important to consider the sport and even the competition. The more popular it is, the lower the overround if the house wants to offer competitive odds; if few bookies offer it, the overround rise.