Vigorish is Yiddish slang and originates from the Russian word for winnings and is effectively the bookie’s profit margin, the charge they make for their services. Also sometimes referred to as the juice, cut or take, or simply shortened to vig, it is what keeps the bookmakers rich and the rest of us – by and large – not rich.
The vig is sometimes used interchangeably with overround and whilst the concepts are similar and related, mathematically they are slightly different. Whilst the vigorish is the bookies’ profit, expressed as a percentage of the total stakes, the overround is the percentage by which the book is over 100%, where 100% would equal a fair book (for example where both horses in a two horse race are priced at even money).
Regardless of these technicalities, the easiest way to think of the vigorish is as the bookmaker’s profit margin. In fixed odds betting this comes from offering odds that do not exactly reflect the probability of each outcome whilst in spread betting it is created by the spread itself.
For example, assuming you are betting on which side will win the toss in a game of cricket, the true odds of either side winning is 50% (as an aside Nasser Hussain lost 14 coin tosses in a row as England captain, the probability of which is one in 8,192). As such you would expect odds of evens, or 2.0 in decimal odds. However, this would leave the bookmakers reliant on luck in order to make a profit, whereas by offering odds of 10/11, or even as little as 5/6, they are able to lock in a theoretical profit over time. I say “over time” because unless they perfectly balance their books (take exactly the same amount of bets on both sides) there is always the chance they could lose in the short term.
How the vig is calculated is quite a philosophical notion, raising the questions of whether the losing or winning bettor pays or whether they both pay and, if the latter, whether they both pay equally. Ultimately it is irrelevant and, as said, the simplest way to consider this is that the vigorish is the bookmaker’s profit.