What is the overround?

In simple terms, ‘overround’, usually expressed as a percentage, is the profit margin deliberately factored into bookmakers’ odds, such that they make a profit on an event, regardless of the outcome. In a fairly weighted, ’round’ betting market, the odds for each outcome, when converted to percentages, add up to 100%. Of course, bookmakers are in the profit business, so it is not in their interest to offer odds that reflect the true probability of each outcome. Instead, they adjust the odds – by how much depends on the bookmaker, the event and the specific market – to create an ‘overround’ book, thereby creating an edge in their favour.

The higher the book percentage rises above 100%, the greater the edge for the bookmaker. Consider a simple coin toss, such as that, say, at the start of the Super Bowl. Obviously, there are just two possible outcomes, heads or tails, with a 50:50, or even money, chance of winning. Bookmakers, though, may offer not even money, or 1/1, but rather 10/11, on either outcome, thereby factoring in a profit margin of around 5%; a book so weighted is described as ‘105% overround’.

Of course, on very rare occasions – as rare as hen’s teeth – bookmakers do make a mistake and create a book in which the total percentages add up to less than 100%. In such an ‘underround’, or ‘overbroke’, book, the layers hand the edge back to bettors, by however far the total percentage is below 100%.