In previous blog articles, I have emphasized that everyone, in one way or another, is a gambler. Whether they realize it or not, life is full of risks and chances. It is crucial for individuals to grasp the rules of the game they are playing, as recent messages from readers have reminded me.

One significant question that has yet to be addressed on this blog is: How do Sportsbooks truly operate? As an avid gambler myself, I understand the mechanics behind these establishments, but it became painfully clear that many people who place bets through sportsbooks have little to no understanding of how the system truly functions. It is a complex and intricate process that requires knowledge and experience to fully comprehend.

Sportsbooks generate their profits through a clever system called the vig (short for vigorish). This term can also be known as “juice” or “the hold” or “the rake”. Essentially, the vig is a commission or charge that a sportsbook adds onto every bet available on their platform. It is seamlessly incorporated into the odds, so customers may not even realize they are paying it.

In order to balance out the bets placed on both sides of an event, sportsbooks utilize the vig to guarantee their own profit (even after paying out winners). This ensures that no matter which outcome prevails, the sportsbook will still come out ahead. The vig acts as a safeguard for the bookmaker, allowing them to continue offering exciting and fair betting opportunities while still maintaining their business.

Having a deep comprehension of variation and probabilities is imperative for individuals, but it is equally vital that they know how to apply this knowledge – in other words, how to gamble. Without understanding the true rules of the game, it is impossible to truly know how to gamble. This requires a keen understanding of not only the numbers and odds, but also the strategies and tactics involved.

Like a skilled chess player, one must be able to anticipate their opponent’s moves and calculate potential outcomes in order to make informed decisions. In the world of gambling, this means knowing when to take risks and when to play it safe. It is like a delicate dance between chance and strategy, where every move could lead to either victory or defeat.

Some followers shared their recent struggles with NFL parlay bets, despite following probability advice given. A quick assessment revealed that they were placing wagers on too many teams in each parlay, as suspected. The truth is, sportsbooks don’t have a preference for which teams you bet on; their ultimate goal is to get you to bet as much as possible. This is why they constantly adjust spreads and odds. Why? Because they profit off of every single bet placed, a fact that some fail to realize.

In the end, the sportsbooks’ indifference towards specific teams makes sense when considering the larger picture. They collect a portion of each bet made, so it doesn’t matter who wins or loses – they always come out on top.

As the anticipation builds for the London NFL game this weekend between the Jets and the Vikings, bettors are strategizing their plays based on current lines. The Jets can be backed with +2.5 points at +102 odds while the Vikings have a -2.5 spread at -122. This means that a successful bet on the Jets is for them to lose by 2 points or less, and this would yield a profit of $102 from a $100 wager, returning a total of $202. On the other hand, betting on the Vikings to win by 3 points or more creates a wagering win and requires a higher stake of $122 but would result in a profit of $100, returning $222.

Some may choose to hedge their bets by placing money on both teams, thinking that it will even out in the end. However, what they may not realize is that this is exactly what the sportsbooks want to happen. By setting and changing odds and lines, they ensure that almost the same amount of money is bet on each side of the ledger. No matter which team wins, they still come out with a profit.

In this scenario, if all bettors evenly split their wagers between both teams, the total amount bet would be $222 and the total winnings would only be $202. Therefore, the sportsbook’s profit margin would be the difference of $20, or 9.0% of the money bet. It’s important to remember that when it comes to sports betting, the house always has an advantage.

In order to place a bet on the outcome of this game, you have two options: the point spread or the moneyline. A moneyline bet is simply choosing one team to win, regardless of the established point spread. In this case, the Jets are listed at +130 and the Vikings at -155. This means that a $100 bet on the Jets would result in a $130 profit, while a $155 bet on the Vikings would yield a $100 profit.

Going back to our previous scenario of betting on both teams, you would need to wager $255 in total to potentially win $230. The $25 difference represents the sportsbook’s profit margin, which is calculated when bets are evenly placed on both teams, amounting to 9.8% of the total wagers placed. So whether you choose to bet on the point spread or the moneyline, the sportsbooks take in between 9 and 10% profit.

Take a moment to ponder the information I have just shared. As time passes, the sportsbooks accrue a 9 to 10% profit margin on all single game bets. So, even if I am only correct half of the time, I am destined to lose money, right? In reality, in order to beat the sportsbook’s vigorish (vig), I must be accurate at least 55% of the time to overcome the vig Knowing this, why would I ever place a bet on a team with a mere 54% chance of winning? The answer is simple – I wouldn’t, and never have.

As I have mentioned before, there is always room for error in predictive algorithms when it comes to sports like NFL football. “Any Given Sunday” is more than just a catchy phrase – it’s a fact that must be accounted for in betting. Thus, I choose to only bet on the moneyline when my chances of winning are at least 67%, which translates to a 4 point spread between my prediction and the lines established by the sportsbooks. This allows me some leeway and does not require perfection to overcome the vig.

The concept of parlays adds a layer of complexity to sports betting, as it involves wagering on multiple outcomes instead of a single win or loss. If you comprehend the earlier profit margin rules used by sportsbooks to balance out the amount of money bet on each side, then you can apply that knowledge to calculate breakeven payoff odds for parlays.

A single bet on a 1 team with a 50/50 chance of winning should result in a payoff at 1 to 1, meaning the amount won is equal to the amount bet.

For a 2 team parlay where both teams must win, the payoff should be at 3 to 1. This is calculated by multiplying the individual probabilities of each team winning (0.5*0.5=.25) and dividing that by the probability of losing (0.75 or 75%) divided by the probability of winning (.25 or 25%), which equals 3.

In a 3 team parlay where all 3 teams must win with a 50/50 chance, the payoff should be at 7 to 1. This is calculated by multiplying the individual probabilities of each team winning (0.5*0.5*0.5 = .125) and dividing that by the probability of losing (0.875 or 87.5%) divided by the probability of winning (.125 or 12.5%), which equals 7.

Using this same scenario, we can determine the proper odds for different parlays: for a 4 team parlay, the odds are 15 to 1; for a 5 team parlay, the odds are 31 to 1; for a 6 team parlay, the odds are 63 to 1; for a 7 team parlay, the odds are 127 to 1; and for an 8 team parlay, the odds are 254 to 1, and so on.

In real world situations these odds are not the payoff odds. For example, using all home teams as an example for the first eight games in the upcoming weekend, an actual sportsbook payout would be: for a 2 team parlay 2.5 to 1; for a 3 team parlay, it would be 5.93 to 1; for a 4 team parlay, it would be 11.61 to 1; for a 5 team parlay, it would be 23.07 to 1; for a 6 team parlay, it would be 46.01 to 1; for a 7 team parlay, it would be 88.74 to 1; and for an 8 team parlay, it would be 171.85 to 1.

By comparing the mathematical fair odds to the actual sportsbook payoffs, the single team 9 to 10% sportsbook vig or profit margin skyrockets to 16.7% for 2 teams, 15.3% for 3 teams, 22.6% for 4 teams, 25.6% for 5 teams, 27% for 6 teams, 30.1% for 7 teams and a whopping 32.3% for 8 teams.

Of course, the allure of winning over $400 with just a $5 bet on a 7 team parlay may be tempting, but it’s ultimately a trap set by the sportsbooks who rake in a hefty 30% profit margin on such bets.

As for my own strategic targets and profit margins, I only place wagers when I am confident with at least a 67% chance of winning and a minimum of a 4 point advantage “over the established points spreads”, never extending beyond a 3 team parlay. This way, I can minimize risk and maximize potential wins while avoiding the traps set by the sportsbooks.

I hope this helps those who have expressed confusion as to why they may be pretty good at picking winners, but struggle with wagering successfully. It’s all about finding wagering overlays and wagering smartly.