This guide shows how to see the real cost of a bet, how to turn any set of odds into a margin, and why prediction markets with no betting margin (otherwise known as “juice” or “vig”) such as Novig keeps more of your return.
Why odds alone are not the full story
Sportsbooks make money no matter which side of the bet wins. They do this by setting the odds such that they get a guaranteed cut no matter which event wins. This is why you’ll sometimes see two books with different odds—they’ve each decided to take a different cut.
Betting margin explained clearly
Imagine you and a friend flipping a coin. Each puts in $10. Winner takes the $20 pot. Total money in is $20 and total paid out is $20, an example of a perfect market.
Now imagine a third friend offers the same coin toss to the two of you at 1.91 on heads and 1.91 on tails. A $10 winning bet now pays $19.10, not $20.
Whether the coin is heads, or tails, the winner only gets $9.10, and the third friend walks away with $0.90 guaranteed, every time.
That third friend is the sportsbook, and that $0.90 is the margin (or vig).
How to calculate margin
A higher margin means worse value for the bettor over time. To find it for a two way market, use this equation:
- Market % = (1 / Decimal odds option A) × 100 + (1 / Decimal odds option B) × 100
- Margin = Market % − 100
Decimal odds are the total return for every 1 unit staked. For example, 2.00 returns 2 for every 1 staked, 1.80 returns 1.8 for every 1 staked.
In a +200 bet, decimal odds are 3.0. In a -110 bet, decimal odds are 1.91.
To calculate decimal odds:
- If the American odds are positive (for example +200):
- Decimal odds = 1 + (American odds ÷ 100)
- Example: +200 → 1 + (200 ÷ 100) = 3.00
- If the American odds are negative (for example -110):
- Decimal odds = 1 + (100 ÷ |American odds|)
- Example: -110 → 1 + (100 ÷ 110) = 1.91
Novig vs. Average Sportsbook
Most sportsbooks operate with margins between 4% and 8%, while some smaller or heavily promoted books go as high as 10%. Novig is at 0%.
Even a few percentage points make a big difference to long-term bettors. Every percent margin is money that doesn’t go to you. A bettor who consistently trades in perfect markets with no margin will always come out ahead of one trading in markets with a margin.
