Calculating the Overround – How to Calculate the House Margin
The overround is the built in profit enjoyed by the bookie or casino, either in a game or
in the prices offered on a horserace, for example. All that is required is to know the
odds offered on all possible outcomes of a game or sporting event. In the case of the
sporting event the prices are all published, for games such as roulette the odds on offer
are the house rules for that particular game.
An example best illustrates how to calculate the profit on a horserace, the runners and
prices of a ficticious race are offered as follows :-
Harvest Moon 6/4
Bobs Best 2/1
Antigua 6/1
Full throttle 15/2
Sunflower 8/1
Each price has two components, e.g. 6/4. This is interpreted as 6 chances of failure and 4
chances of success. Convert this price into percentage by multiplying the second figure by
100 and then dividing the result by the sum of both figures as follows :- 4 * 100 / (6 +
4) = 40%.
Do this for every price on offer as follows –
Harvest Moon 4 * 100 / (6 + 4) = 40%
Bobs Best 1 * 100 / (2 + 1) = 33%
Antigua 1 * 100 / (6 + 1) = 14%
Full Throttle 2 * 100 / (15 + 2) = 12%
Sunflower 1 * 100 / (8 + 1) = 11%
Total = 110% In this ficticious example the built in profit is 10%.
Typically horse race overrounds increase with the number of runners in a race, a ten horse
race would show an approximate 10% overround whereas a thirty horse race would carry
approximately a 30% overround. Even though the overround can be considered unfair, spare a
thought for the layer. He has to cope with lack of information (inside information) and
also the possibility of fixing the result.
Martin Burgess is owner of affiliate sites Firmex Online
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