Betting jargon can often be a little confusing for the layman and ‘overround’ is a good example of that. With that in mind, we’re going to explain what overround means in its simplest terms to provide a clearer understanding of how betting markets work and what the terms are when having a bet.
Sportsbook Betting
Sportsbook betting is the most common form of betting, where a punter places a bet with a bookmaker at odds which the bookmaker has set. Winning bets are paid out to the punter by the bookmaker and losing bet stakes represent profit for the bookmaker.
Betting odds are a representation of the likelihood of that outcome coming to fruition. In sports betting terms, this is the probability that a sports team will win, lose or draw. The total percentage of the possible outcomes should therefore be 100%.
However, bookmakers set the terms and they want to minimise losses and maximise profit. This is where overround comes into play.
Overround
Overround is essentially a profit margin put into the betting market by the bookmakers who set the odds. This means that the bookmaker owns more than 100% of the market and will therefore make some profit regardless of the outcome, or at the very least remove the possibility of substantial losses.
E.g.
Arsenal to win 4/11 (1.36)
Draw 17/4 (5.25)
Chelsea to win 7/1 (8.0)
In this example, the market would be 105% overround, meaning the profit margin for the bookmaker is 5%. The higher the profit margin, the worse value the punter is getting and vice versa, so the closer the market is to 100%, the punter gets better value.
We calculate the overround figure by adding up the possibilities of each outcome, so in this example the probability of each outcome is as follows: Arsenal (73.5%) draw (19%) and Chelsea (12.5%). 73.5+19+12.5=105.
The same system applies to all sportsbook markets so it doesn’t matter if it’s a horse race with 30 runners or a tennis match with only two outcomes.
Regular punters who are aware of the overround will therefore shop around looking for the best value when placing their bets. Competition ensures that bookmakers don’t tend to set too high an overround as they would just lose custom to rival companies. As a rule you should steer clear if the overround is 110% or more as it represents poor value.
Exchange Betting
The overround doesn’t apply to betting on exchanges as the odds which a punter takes when placing the bet aren’t set by the exchange. Punters essentially place bets against each other, rather than against a bookmaker. Bookmaker profit is instead achieved through commission on winning bets. This is why you often find better prices on the exchanges, as the odds are a more accurate reflection of the outcome.
Overround in Different Bet Types
Bookmakers love multiples as they’re a good way of building a bigger overround. For example, if you were to place a bet on a five-horse accumulator and the overround for each individual market was 5%, the overround for that one bet would accumulate for each selection so it would be 25%.
The Legality of Overround
It may not seem like the fairest of practices but it ensures that bookmakers can continue to take bets on sports markets and it’s a legally established aspect of betting which punters must consider.
It’s the responsibility of the Gambling Commission to ensure that punters are betting under fair conditions and this is a major reason that betting only with licensed bookmakers is advised.