Who Pays the Vig?

 

Vig is short for vigorish, which is the amount of money that the bookmaker takes to handle wagering. It’s also called the juice. It’s how bookmarkers makes their money.

Who pays the vig when betting on football?  Even people who’ve bet football for decades get this completely wrong.

Let’s say two gamblers bet on a football game, they bet $11 to win $10, each of them taking opposing teams. One of them wins his bet and he wins $10. The other loses his bet, and he loses $11. Who pays the vig, the winner of the bet or the loser? The answer almost every person will give is that the loser pays the vig by virtue of the extra dollar he pays.  However, this is incorrect. The winner pays the vig. The winner always pays the vig in games of chance, whether it be in the casinos, the lottery or in sports betting. The reason for this is that the loser of the bet always loses what he had at risk, no more, no less. The winner always receives LESS than the correct payout, the correct payout here being $11 on a 50/50 proposition. The difference in what the winner should have been paid and what he received is what the bookmaker kept, or the vig. The only exception to this is when the lottery doesn’t have winner for so long that eventually someone wins one of those huge jackpots and he indeed gets more than the correct payout.  

Let me give a simple example. If two friends decide to bet $11 on a football game, one wins $11 and the other loses $11. There’s no vig in play here. Let’s say the same two friends decide to bet another game, but this time with a bookie. Once again they both bet $11. When the game is over, one of them losses $11, just like in the first case. However the winner wins only $10, as the bookie keeps a dollar as his fee, which is the vig.  In both cases, the loser loses the same amount. It doesn’t matter to him if a bookie was involved or not. He loses what he bet. Does it matter to the winner if a bookie was involved? Absolutely! He wins $1 less when the bookie was used.

I had a friend tell me once that I had it all wrong, that I was playing with the numbers somehow. He tried turning things around. His reasoning went like this: If two friends decide to bet $10 on a football game, one wins $10 and the other loses $10. There’s no vig in play here. Let’s say the same two friends decide to bet another game, but this time with a bookie. When the game is over, the winner receives $10, but the loser loses $1 extra for a total of $11. In both cases, the winner wins the same amount. It doesn’t matter to him if a bookie was involved or not. Does it matter to the loser if a bookie was involved? Absolutely! He loses $1 more when the bookie was used.

Can you spot the flaw in that reasoning?

What my friend forgot is that while the winner wins the same amount, he was risking $1 more with the bookie. He was still risking $11 to win $10. He was still shorted $1 in the payoff, which is the vig. 

Remember, the loser ALWAYS loses everything he risks no matter the game, no matter if a bookie or a casino is involved or not. The vig is always deducted from the winner and never added to the loser. The winner wins less than the correct payout. The difference between what the winner receives and what he should have been paid is the vig.