Vigorish, or simply the vig, also known as juice or the take, is the amount charged by a bookmaker Most bookmakers in the United States bet merely on college and professional sports, though in the United Kingdom and Ireland they offer a wider range of bets, including each-way betting on golf, football and tennis, and especially horse racing and greyhound racing. They also specialize in novelty events such as betting that there will be a white, or bookie, for his services. In the United States it also means the interest on a shark's loan. The term is Yiddish Yiddish is a High German language of Ashkenazi Jewish origin, spoken throughout the world. It developed as a fusion of German dialects with Hebrew, Aramaic, Slavic languages and traces of Romance languages. It is written in the Hebrew alphabet slang originating from the Russian Russian is the most geographically widespread language of Eurasia, the most widely spoken of the Slavic languages, and the largest native language in Europe. Russian belongs to the family of Indo-European languages and is one of three living members of the East Slavic languages. Written examples of Old East Slavonic are attested from the 10th word for winnings, выигрыш vyigrysh. Bookmakers use this concept to make money on their wagers regardless of the outcome. Because of the vigorish concept, bookmakers should not have an interest in either side winning in a given sporting event. They are interested, instead, in getting equal action on each side of the event. In this way, the bookmaker minimizes his risk and always collects a small commission The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often will be calculated on the basis of a percentage of the goods sold. This is a way for firms to solve the principal-agent problem, by attempting to realign employees interests with those of the firm from the vigorish. The bookmaker will normally adjust the odds In probability theory and statistics, the odds in favor of an event or a proposition are the quantity , where p is the probability of the event or proposition. The odds against the same event are, or line Spread betting is any of various types of wagering on the outcome of an event, where the pay-off is based on the accuracy of the wager, rather than a simple "win or lose" outcome, such as fixed-odds betting or parimutuel betting. A spread is a range of outcomes, and the bet is whether the outcome will be above or below the spread. Spread, to attract equal action on each side of an event.
The concept is also sometimes referred to as the overround, although this is technically different, being the percentage the event book is above 100% whereas the vigorish is the bookmaker's percentage profit on the total stakes made on the event. For example, 20% overround is vigorish of 16 2⁄3%. The connecting formulae are v = o⁄(1 + o) and o = v⁄(1 − v) where o is overround.
It is simplest to assume that vigorish is factored in proportionally to the true odds, although this need not be the case. Under proportional vigorish, a moneyline odds Fixed-odds betting is a form of wagering against odds offered by a bookmaker, an individual, or on a bet exchange bet listed at −100 vs. −100 without vigorish (fair odds) could become −110 vs. −110 with vigorish factored in. Under disproportional vigorish, it could become −120 vs. +100.
Common misconceptions about vigorish are that it is paid by only the "loser", only the "winner", or both in all circumstances. A claim on when and to what extent a gambler pays vigorish fees, however, cannot be abstracted from an individual gambler's behavior. A gambler's behavior with respect to different odds on an event must first be defined and only then can a determination be made on how the vigorish affects him when he wins and loses.
Reference: in the April 12, 2010 issue of the New Yorker, a cartoon shows a client speaking to his banker. The caption says "Could you stop referring to the interest rate as 'the vig'?"
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Example
A fair odds bet: Two people want to bet on opposing sides of an event with even odds. They are going to make the bet between each other without using the services of a bookmaker. Each person is willing to risk $100 to win $100. After each person pays his $100, there is a total of $200 in the pot. The person who loses receives nothing and the winner receives the full $200.
By contrast, when using a sportsbook with the odds set at −110 vs. −110 (10 to 11, 1.9090..) with vigorish factored in, each person would have to risk or lay $110 to win $100 (the sportsbook collects $220 "in the pot"). The extra $10 per person is, in effect, a bookmaker's commission for taking the action. This $10 is not in play and cannot be doubled by the winning bettor; it can only be lost. A losing bettor simply loses his $110. A winning bettor wins back his original $110, plus his $100 winnings, for a total of $210. From the $220 collected, the sportsbook keeps the remaining $10 after paying out the winner.
Discussion
In the above example, the bookmaker has taken a rake, or scaled commission fee, of $10 ÷ $220 = 4.55%. Since the winning bettor got his full $110 wager back, plus $100 in winnings, many observers will assert that only the losing bettor paid the vigorish. Others would attest that the winner — who had risked $110 and only received $210 in the end, instead of doubling his money to $220 — is the only bettor who paid the vigorish. To discuss how the bettors are affected by the vigorish, we must first define what they would have bet at fair odds (without the presence of vigorish) or else there is no way to compare how much tax is placed on the winner or loser due to the vigorish. There are unlimited possibilities for how the presence of vigorish could affect the amount wagered by a bettor, since a bettor is free to bet in any arbitrary way based on the odds. There are, however, several natural options to consider which give different results on how vigorish affects a bettor.
- The gambler has a target amount he wants to win, which is independent of the presence or absence of vigorish. As an example, for an even match we would have −100 vs. +100 for fair odds and the gambler wagers 100 to win 100. Under proportional vigorish the odds would become −110 vs. −110 and so gamblers must wager 110 to win 100. In this case, losers lose 110 under the juiced odds compared to 100 under fair odds, so the loser pays 10 extra. The winner gets back his 110 plus 100 profit, compared to getting back his 100 plus 100 profit under fair odds. The winner has no net difference since he is up 100 either way. So the loser pays the full vigorish of 10 under this assumption.
- The gambler has a given amount he is willing to risk, independent of vigorish. Under fair odds the gambler risks 100 to win 100. Under vigorish, the gambler still risks 100 to win 100 × (100 ÷ 110) = 90.9. Under this behavior, the loser loses 100 in both cases, so pays no vigorish. The winner wins 100 net under fair odds and 90.9 net under vigorish, so he pays 9.1 in vigorish. The winner pays the full vigorish under this assumption.
- The gambler bets more when he has a greater edge (better payout for a given chance of winning). A Kelly In probability theory, the Kelly criterion, or Kelly strategy or Kelly formula, or Kelly bet, is a formula used to determine the optimal size of a series of bets. In most gambling scenarios, and some investing scenarios under some simplifying assumptions, the Kelly strategy will do better than any essentially different strategy in the long run. It gambler is one such gambler, who seeks to maximize his rate of bankroll growth in the limit of infinite bets placed over time. This type of gambler will bet more when the payout reflects a bigger advantage for him. The fact that he bets at all indicates that he thinks he has an advantage in the bet, so the presence of vigorish reduces this edge by reducing the payout for a given amount wagered. Therefore, these gamblers on either side of the wager will both bet less than they would have at fair odds (assuming proportional vigorish). The losers therefore lose less than they would have under fair odds, so counter-intuitively these losers do better with vigorish. The winners not only receives a lower payout factor on his bet, but they also risked less than they would have at fair odds, so they pay the full rake of the bookmaker, plus the amount saved by the losers, since (amount cost by winners) − (amount saved by the losers) = (full vigorish raked by the bookmaker). So for these gamblers, the losers pay negative vigorish, while the winners pay more than the full vigorish raked in by the bookie Most bookmakers in the United States bet merely on college and professional sports, though in the United Kingdom and Ireland they offer a wider range of bets, including each-way betting on golf, football and tennis, and especially horse racing and greyhound racing. They also specialize in novelty events such as betting that there will be a white.
These are three examples of possible gambler behaviors that all give different answers to the distribution of vigorish fees amongst winners and losers. One therefore cannot say precisely whether winners or losers or both are paying the vigorish until the gamblers' behaviors with respect to the fair odds and juiced odds is defined.
Vigorish percentage
Vigorish percentage can be defined in a way independent of the outcome of the event and of bettors' behaviors by defining it as the percentage raked in a risk-free wager. This definition is the rake of the bookie as a percentage of total bets received if the bookie has balanced the wagers so that he makes equal profit regardless of the outcome of the event.
For a two outcome event, the vigorish percentage, v is
where the p and q are the decimal Fixed-odds betting is a form of wagering against odds offered by a bookmaker, an individual, or on a bet exchange payouts for each outcome. This should not be confused with the percentage a bettor pays due to vigorish. No consistent definition of the percentage a bettor pays due to vigorish can be made without first defining the bettor's behavior under juiced odds and assuming a win-percentage for the bettor. These factors are discussed under the debate section.
For example, −110 side pricing of an even match is 4.55% vigorish, and −105 side pricing is 2.38% vigorish.
Other kinds of vigorish
- In table poker Poker is a family of card games that share betting rules and usually hand rankings. Poker games differ in how the cards are dealt, how hands may be formed, whether the high or low hand wins the pot in a showdown (in some games, the pot is split between the high and low hands), limits on bets and how many rounds of betting are allowed. In most, the vigorish, more commonly called the rake, is a fraction of each bet placed into the pot. The dealer Any casino with a poker room must hire a staff of dealers. Casinos generally pay dealers minimum wage. However, a dealer's primary source of income is not salary, but tips from players*. Tip income may be substantial for dealers who can deal hands quickly and efficiently, and are selected by the casino to deal in higher limit games removes the rake from the pot after each bet (or betting round), making change if necessary. The winner of the hand gets the money that remains in the pot after the rake has been removed. Most casinos take 5-10% of the pot, capping the total rake at $3 or $4.
- In the house-banked version of baccarat Baccarat is a casino card game. It is believed to have been introduced into France from Italy during the reign of Charles VIII of France (ruled 1483-1498), and it is similar to Faro and Basset. There are three accepted variants of the game: baccarat chemin de fer, baccarat banque (or à deux tableaux), and punto banco (or North American baccarat) (also mini-baccarat) commonly played in North American casinos, vigorish refers to the 5% commission (called the cagnotte) charged to players who win a bet on the banker hand. The rules of the game are structured so that the banker hand wins slightly more often than the player hand; the 5% vigorish restores the house advantage Games available in most casinos are commonly called casino games. In a casino game, the players gamble casino chips on various possible random outcomes or combinations of outcomes. Casino games are available in online casinos, where permitted by law.[citation needed] Casino games can also be played outside of casinos for entertainment purposes, to the casino for both bets. In most casinos, a winning banker bet is paid at even money, with a running count of the commission owed kept by special markers in a commission box in front of the dealer. This commission must be paid when all the cards are dealt from the shoe or when the player leaves the game. Some casinos don't keep a running commission amount, and instead withdraw the commission directly from the winnings; a few require the commission to be posted along with the bet, in a separate space on the table.
- In pai gow poker, a 5% commission charged on all winning bets is referred to as vigorish. Unlike baccarat, the commission is paid after each winning bet, either by the player handing in the amount from his stack of chips, or by having the vig deducted from the winnings. Pai gow poker is an even game, without any built-in advantage for the house; the commission restores the advantage.
- In craps Craps is a dice game in which players place wagers on the outcome of the roll, or a series of rolls, of a pair of dice. Players may wager money against each other or a bank (casino craps). Because it requires little equipment, street craps can be played in informal settings, vigorish refers to the 5% commission charged on a buy bet, where a player wishes to bet that one of the numbers — 4, 5, 6, 8, 9 or 10 — will be rolled before a 7 is rolled. The commission is charged at the rate of $1 for every $20 bet. The bet is paid off at the true mathematical odds, but the 5% commission is paid as well, restoring the house advantage. For many years, this commission was paid whether the bet won or not. In recent years, many casinos have changed to charging the commission only when the bet wins, which greatly reduces the house advantage; for instance, the house advantage on a buy bet on the 4 or 10 is reduced from 5% to 1.67%, since the bet wins one-third of the time (2:1 odds against). In this case, the vig may be deducted from the winnings (for instance, a $20 bet on the 4 would be paid $39 — $40 at 2:1 odds, less the $1 commission), or the player may simply hand the commission in and receive the full payout. This rule is commonplace in Mississippi Mississippi is bordered on the north by Tennessee, on the east by Alabama, on the south by Louisiana and a narrow coast on the Gulf of Mexico and on the west, across the Mississippi River, by Louisiana and Arkansas casinos, and becoming more widely available in Nevada Nevada is the seventh-largest state in area, and geographically covers the Mojave Desert in the south to the Great Basin in the north. It is the most arid state in the Union. Approximately 86% of the state's land is owned by the U.S federal government under various jurisdictions both civilian and military. As of 2008, there were about 2.6 million.
- Vig may generically refer to the built-in house advantage on most bets on any game in a casino.
- Vig is sometimes used by investment bankers to describe profits from advisory and other activities.
- In backgammon Backgammon is one of the oldest board games for two players in which the playing pieces are moved according to the roll of dice. Players win by removing all of their pieces from the board. There are many variants of backgammon, most of which share common traits. Backgammon is a member of the tables family, one of the oldest classes of board games, the recube vig is the value of having possession of the doubling cube to the player being offered a double.
- The payouts and winning combinations available on most slot machines A slot machine , fruit machine (British English), poker machine (Australian English) or simply slot (American English) is a casino gambling machine with three or more reels which spin when a button is pushed. Slot machines are also known as one-armed bandits because slot machines were originally operated by a lever on the side of the machine (the and in other electronic gambling systems are often designed such that an average of between 0.1% to 10% (varying by machine and facility) of funds taken in are not used to pay out winnings, and thus becomes the house's share. Machines or facilities with a particularly low percentage are often said to be loose.
- Pittsburgh Pirates announcer Bob Prince coined the term "hidden vigorish" to describe an underdog's ability to beat the odds in a given situation.
See also
- Rake (poker)
- Loan shark A loan shark is a person or body that offers unsecured loans at high interest rates to individuals, often enforcing repayment by blackmail or threats of violence
References
- ^ "Vigorish defined". Originally Published: February 15,2008. http://www.cooperspick.com/fullarticle.asp?503-Vigorish-aka-The-Take-or-Juice-explained.
Categories: Gambling terminology Phrases and terms connected with gambling. There is more gambling terminology in the other subcategories of Category:Gambling | Wagering
