The short answer
A sportsbook earns money from a margin built into its prices, not from guessing winners. If the prices on both sides of a market imply chances that add up to more than 100%, the sportsbook collects more in losing bets than it pays on winning ones, as long as the money on the two sides is balanced. That margin is often called the vig, the juice or the hold, and the three words are not exactly the same thing.
The margin in one picture
A market priced at -110 on both sides implies 52.4% for each side, which adds up to 104.8%. The extra 4.76% is the margin. Now imagine two bettors, each staking $110 on opposite sides. The sportsbook takes in $220. One of them wins and is paid $210, which is the $100 profit plus the $110 stake. The sportsbook keeps $10, whichever side won. The explainer on vig and parlays shows this as a moving diagram.
Margin, vig and hold
The three words get used loosely, so it helps to separate them. The margin is what is built into the prices: the amount by which the implied chances exceed 100%. The vig, or juice, is the same idea seen from the bettor's side, the extra you pay at -110 compared with an even price. The hold is what the sportsbook actually keeps as a share of the money staked, which depends on how bets land and how the money is split between the sides. In a perfectly balanced market the hold over many bets approaches the margin. In real life it varies from game to game, and a sportsbook can lose on one event and win on another.
What a bet costs you on average
If a bettor has no edge over the market, the average result of a $100 bet at -110 is a loss of about $4.55, which is 4.5% of the stake. Put another way, you need to win 52.4% of the time, not 50%, to come out even. The cost is not paid up front. It shows up as a lower average result across many bets.
Margins differ between markets. A market priced at -125 and +105 has a margin of 4.34%, and the fair chances are about 53.2% and 46.8%. Comparing the margin of two prices for the same game tells you which app charges less on that market. The odds calculator computes it for any pair.
Why parlays cost more
A parlay multiplies prices, and the margin multiplies with them. Take legs of -110 with a $100 stake. A two-leg parlay pays $264.46 in profit at +264, a three-leg pays $595.79 at +596, and a four-leg pays $1228.33 at +1228. If each leg had a fair 50% chance, the average cost of the bet would grow with each leg.
| Legs | Break-even win rate | Fair chance to win | Average cost per dollar |
|---|---|---|---|
| 1 | 52.4% | 50.0% | 4.5% |
| 2 | 27.4% | 25.0% | 8.9% |
| 3 | 14.4% | 12.5% | 13.0% |
| 4 | 7.5% | 6.3% | 17.0% |
The cost of one leg is about 4.5% of the stake, and by four legs it is about 17.0%. That does not mean a parlay is never worth placing. It means the extra payout is bought with a larger average cost. The parlay calculator shows this for any ticket and for chances you set yourself.
Other ways an app earns
The margin on prices is the main source, but not the only one. Cash out offers carry a margin of their own, as the article on cash out shows. Promotions can be a cost for the app and a way of winning new accounts, and their terms decide what they are worth to you, which is covered in the guide to valuing a sportsbook bonus. We do not claim to know how a particular app prices these, because we have not verified app-level figures.
What it means for you
You cannot remove the margin, but you can pay less of it. Compare prices for the same side across the apps you can legally use. Prefer markets with lower margins when you have a choice. Be careful with parlays, because the cost rises with every leg. And keep your own estimate of a chance separate from the price, because the break-even rate is the bar the bet has to clear.
Common misunderstandings
- Believing sportsbooks always know who will win. They only need the prices to add up to more than 100%.
- Believing the vig is a fee paid up front. It is built into the price and shows up in the average result.
- Treating hold and margin as identical. Hold is what the book actually keeps, and it varies.
- Believing a longer parlay is a bigger bargain. The cost grows with legs.
A checklist for comparing prices
- What is the break-even rate for the side you want?
- What is the margin of the market, using both sides?
- Is the same side priced better at another approved app?
- If you plan a parlay, what is its average cost compared with single bets?
Comparing margins
| Prices (side one / side two) | Implied chances added up | Margin |
|---|---|---|
| -110 / -110 | 104.8% | 4.76% |
| -105 / -115 | 104.7% | 4.71% |
| -120 / +100 | 104.5% | 4.55% |
| -200 / +170 | 103.7% | 3.70% |
The prices differ, but what to look at is the margin in the last column. A market at -105 and -115 costs less than one at -110 and -110, even though one of its sides looks more expensive. The example prices are for illustration. Markets at real apps change all the time.
What a margin means at scale
At an average cost of about 4.5% of the stake, $1,000,000 in bets on balanced -110 markets would produce an average gap between money collected and money paid out of about $45454.55. That is before the sportsbook's costs, including taxes, staff and promotions. The margin is a gross figure and not a profit, which is why a sportsbook cares about volume and why it competes to attract bettors.
Where state tax comes in
Sportsbooks pay tax to the states where they operate, and what we have verified from official pages shows how different the rates are. The Pennsylvania Gaming Control Board's FAQ gives a 34 percent tax on daily gross sports wagering revenue, and the New York Gaming Commission says sports wagering revenue is taxed at 51 percent. Missouri's annual report gives a 10 percent tax on adjusted gross revenue. Read the quotes and sources on our Pennsylvania, New York and Missouri pages. These taxes fall on the sportsbook's revenue, so they are not a charge on your stake, but they are part of the costs a margin has to cover. We have not verified rates for other states.
Balanced books and real life
The picture of two equal bets on opposite sides is a simplification. In real life, money does not arrive in equal amounts, and a sportsbook may end up with more at risk on one outcome than the other. It can move its prices to attract bets on the other side, and it can also decide to accept some of the risk. The margin works over many events. On any one game the sportsbook can win or lose, which is why prices move between the opening of a market and the start of the game.
Reading a price page: five checks
When you open a market, five checks take less than a minute. Convert both sides to break-even rates and add them. The excess over 100% is the margin. Compare the side you want with the same side at another approved app. Look at whether the line is a whole number or a half point, because that changes what the price is paying for. If you are building a parlay, add the average cost of every leg before you place it. And ask whether the bet is one you would make at this price if nobody had offered you a bonus for making it.
None of these checks predicts a winner. They tell you what you are paying to play, which is the one thing you can know for sure before a game starts.
What the table says about your betting mix
The cost per dollar in the parlay table is not a verdict on any bet, but it is a useful way to look at your own habits. Two bettors who each stake $100 a week pay different average costs if one places a single bet and the other places a four-leg parlay. At the figures above, the first pays about 4.5% of the stake on average and the second about 17.0%. If most of your stake goes into long tickets, your average cost per dollar is higher than the margin on a single bet suggests. That is information you can use when you decide how to split your budget, and it costs nothing to check.
Words you will meet
- Margin: the amount by which implied chances exceed 100%.
- Vig, juice: the extra cost of a price compared with an even price.
- Hold: the share of money staked that the sportsbook keeps.
- Fair price: the price with the margin removed.
- Break-even rate: the win rate a price needs.
Keeping it in proportion
Knowing how the margin works does not remove it. Bet only what you can afford to lose, and treat any result as entertainment spending. When betting stops being fun, the responsible gambling page has tools and places to get help, and 1-800-GAMBLER answers at any time.
Frequently asked questions
How do sportsbooks make money?
They build a margin into prices so the implied chances add up to more than 100%. They collect more on losing bets than they pay on winning ones when the sides are balanced.
What is vig in betting?
It is the extra cost built into a price compared with an even price. At -110 on both sides the margin is about 4.8%, which costs a bettor about 4.5% of each stake on average.
What is the difference between vig and hold?
The vig is built into the price. The hold is the share of money staked that the sportsbook actually keeps, which varies with how bets land.
Why do parlays have a higher cost?
The margin multiplies along with the prices. In the example above the average cost rises from about 4.5% of the stake for one leg to about 17.0% for four.
Can you avoid the vig?
Not completely, but you can pay less by comparing prices for the same side at different approved apps.
Do sportsbooks lose money?
On a single event they can. The margin works over many bets and balanced markets, not on every game.