Overround
Overround is the sportsbook margin embedded in odds, causing implied probabilities to sum to more than 1. It is also called the vigorish or “vig” in many contexts.
Definition
Overround is the bookmaker margin built into quoted odds. In a set of mutually exclusive outcomes, the implied probabilities typically sum to more than 1. The excess is the overround.
Why it matters
If you convert sportsbook odds directly into implied probabilities, you will overstate true probabilities because the odds include margin. To compare your forecasts to a sportsbook, you usually want to remove the margin.
How it is used
• Measure how expensive a market is.
• Normalize odds to estimate “fair” probabilities (see removing the vig).
Related
Overround is closely related to vig and to conversion steps like removing the vig.