Studysoccer.com - how does the overround work in football betting?

logo

Bookmakers take bets on the outcomes of football matches. Assuming a football match is not fixed, the outcome is not known in advance. Bookmakers use statisticians to calculate the probabilities associated with each of these outcomes for each match they are offering to take bets on. Below is a table illustrating a set of fixtures, and the probabilities associated with the outcomes for each match calculated by statisticians.

Event	Home win	Draw	Away win
Probability	.71	.20	.09
Odds	1.41	5.0	11.11

The sum of these probabilities is 1.0 (.71+.2+.09=1.0). The odds associated with these probabilities are roughly 1.41, 5.0, and 11.11. A bookmaker offering odds on matches calculated in this fashion will not make any money. They must offer odds which do not represent value to the punter. They must use the overround.

Event	Home win	Draw	Away win
Probability	.8	.22	.1
Odds	1.25	4.5	10

The odds in the second table are approximately 12% lower than those in the first table. The sum of the probabilities in this circumstance is 1.12. There is an overround of 12%. The bookmaker will, over the long run, be in profit by 12% of the amount staked by punters.

Next, on to a discussion of variance...

...or back to the introduction of the overround...