Whether you’re betting on sports or playing casino games, there is always a house edge. This is the edge that ensures the scales remain tipped in the house’s favor. In the following guide, we’ll show you how to calculate it.
What is the Edge in Sports Betting?
To understand how the edge works, consider a coin flip.
It has a 50% chance of landing on Tails and a 50% chance of landing on Heads. If we convert these chances into odds, both outcomes would be +100 (Evens, 2.00 in Decimal Odds). This means that a $100 wager wins $100.
But if a sportsbook was to offer the same wager, it would also be taking a gamble. It doesn’t charge for its services. It doesn’t make money from ads. It relies on bets, and the only way for it to profit in this scenario is to hope that 51% or more people bet on the losing outcome.
It’s not feasible.
That’s where the edge comes in. Actual coin flips (such as those wagered on the toss that starts the Super Bowl) usually have odds of -105 both ways. This means you must wager $105 to win $100.
The extra $5 is the sportsbook’s edge. It’s a 5% commission (Or Vig as they call it in the industry) that ensures the line remains profitable for the house even if the bets are 50/50.
Take this game for example. Here FanDuel is taking both teams at -108.
We calculated the house edge on a simple 50/50 coin flip, but let’s look at something a little more complicated:
- Team A = -300
- Team B = +265
To get the edge here, we first need to calculate the implied probability, and we do this using two different formulas, one for negative odds and one for positive:
- Negative Odds / (Odds + 100) * 100
- Example for Team A: 300 / 400 * 100 = 75
- 100 / (Positive Odds + 100) * 100
- Example for Team B: 100 / 365 * 100 = 27.39
The answers are our implied probabilities as a percentage (75% and 27.39%). Once we have these, we just need to add them together and subtract 100 to get the house edge.
- 75 + 27.39 / 100 = 2.39%
How Can you Overcome the House Edge in Sports Betting?
If you are a member of several sportsbooks and monitor them for odds, you could eradicate the edge completely.
Let’s say that one sportsbook has Team A odds of -200 and another has Team B odds of +270. The edge would actually be in your favor, which means you could bet on both outcomes and profit regardless. Such big swings are rare, but if you do your research, bide your time, and use bet boosts where available, it’s not uncommon to find similar scenarios.
Here are three tactics we recommend trying out:
Tactic #1 - Use Odds Comparison tools
Shopping the lines and odds is an absolute must if you want to be an effective and profitable Sports better. More often than not, there are large variances between books. Some are holding large amounts on certain outcomes, so they ease the odds in the opposite outcome to help manage their risk.
We here at OddsCrowd have a great Odds Comparison tool, that has the fastest and most accurate Odds Data in the US driving it.
Tactic #2 - Follow +EV Bets from trusted data sources
+EV bets, or Expected Value bets are wagers based on who you think will win, but a bet on odds you believe offer value relative to the likelihood the outcome will happen. Sound complicated? Well luckily at OddsCrowd we have built software to help you. We leverage an algorithm to determine what bets at which sportsbooks are offering '+EV bets'. We aggregates the odds and line movements of the most advanced sportsbooks in the world to calculate what it deems the ‘perfect odds’ for every matchup. When the algorithm finds Odds by Legal US Sportsbooks that it determines offer value relative to it’s perfect odds, it recommends the bet.
Tactic #3 - Monitor Line Moves and Odds
Monitor the bet line and wager at the right time. The bet lines are constantly moving in accordance with the wagers, and if you can anticipate these movements and bet at the right time, you can reduce the edge. You can use the OddsCrowd game previews to monitor odds and line history for specific games.