Thread: Vig Formula
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Old 03-06-2007, 01:42 AM   #4 (permalink)
Ganchrow
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I talk about calculating vig here.

In general the theoretical hold (the "vig ") is given by 1 - 1/overround where overround is the sum of the reciprocals of the underlying decimal odds. (This is equivalent to saying that the overround is the sum of the implied probabilities of the underlying odds).

So for example if the market were +200/-220 the theoretical hold would be 1 - 1/ (100/300 + 220/320) ≈ 2.041%.

This works for multi-way markets, too. For example, if the market were -150/+340/+400, the theoretical hold would be 1 - 1/(150/250 + 100/440 +100/500) ≈ 2.655%.
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