A Crash Course in Vigorish

Winners -- not losers -- pay vigorish.

Many bettors are also operating under the fallacy that losers pay vigorish. This is wrong. Losing bettors actually play for free. Only winners pay vigorish.

Here's how it works: Say two bettors each risk $110 with the same bookmaker on opposite sides of the same proposition. Each bettor is trying to win $100. The bookmaker receives a total of $220 from the two bettors. One bettor wins, one bettor loses, and the winner picks up a total of $210 (the $110 he put at risk, plus his $100 in winnings.) That leaves the bookmaker with $10 gross profit as his vigorish on the deal. The bookmaker kept $10 of the $220 total amount risked.

Had the two bettors each risked $110 against the other without using the services of the bookmaker, the winner would have walked away with $220 instead of $210. (The amount risked by each bettor was $110; not $100.) Who paid the bookmaker? The winner paid the entire vig. The loser - since he lost the bet - would have lost whatever he put at risk, with or without the services of the bookmaker. The winnings, which would have been $110 without using the services of the bookmaker, were shorted by ten dollars or 9.1 percent.

This is also the way it works in virtually all casino games, such as craps, roulette, baccarat, blackjack, and even slot machines. When a loser loses, he loses what he puts at risk, of course. In roulette, for example, someone betting on an 'even-money' proposition (red or black, high or low, odd or even) and losing, loses his bet, whatever he risked, period. But someone winning an 'even-money' roulette proposition does not get paid the 'fair' odds of 10-to-9. (There are 20 ways to lose an even-money bet at roulette and only 18 ways to win. The odds are 10-9 against you.) The winner only gets paid 1-to-1 odds. In all these table games, the winner pays the vigorish.

Of course, in a larger, more philosophical sense, losers not only pay the vig but also the winning bettors, light bills of the casino and the salaries of the casino employees. But we're not addressing philosophy here. We're addressing how the business of gambling actually 'works'. Vigorish is deducted from winnings.

It is important to understand this point. You can be sure most bettors don't. In effect, the bookmaker becomes a partner of the winning bettor. Understanding this point is important when figuring the real cost of various sports betting opportunities, including parlays. (See our free article, Parlays for Profit). For example, laying 12-to-10 is a one-way ticket to the poorhouse. Laying 12 to win 10 costs the winner a whopping 16.67% of his winnings.