Why the juice matters
A guest post by a friend of Prime Sports and one of the sharpest players out there, Captain Jack Andrews (@capjack2000)
Prime Sports asked Captain Jack if he could go into detail of what juice is and why understanding it is key to good bankroll management across the lifetime of your playing experience.
Jack was not compensated for the article, and no editorial requirements to promote Prime in particular were given to him.
Follow Captain Jack @capjack2000
Why the juice matters
Some people call it juice, some call it vig, others call it the house edge. Whatever you call it, the vigorish is one of the unfortunate realities of sports betting. It’s why being the sportsbook operator is profitable, and being the sportsbook bettor is so frustrating.
The Basics of Juice
First, let’s review the basics for anyone unfamiliar. The sportsbook sets lines on a variety of games and bet types. We, the bettors, get to choose which games we want to bet and which ones we’d rather not touch. To even the playing field a little against adverse selection, the sportsbook gets to charge a vigorish.
For instance, a coin-flip would be 50/50, or +100 expressed in US odds. But a sportsbook might offer that wager at -110 on either Heads or Tails. That difference between +100 and -110 is the juice.
Some people quickly assume the juice in sports betting is 10%. $110 to win $100. However, if you win, you get your stake back plus your winnings. “The loser pays the juice.” is the refrain you’ll hear from experienced sports bettors.
If there are two bettors on the coin-flip and one takes Heads while the other takes Tails, they’d both put up $110 to win $100. The winner gets their $110 back plus an extra $100. The loser gets nothing, and the sportsbook gets $10. The juice represents $10 of the total $220 wagered between the two parties. Divide $10 by $220 and you get the juice in terms of a percentage. In this case, it’s 4.55%. There’s your house edge.
Now that we have the basics down it should be obvious that the lower the juice, the better for the bettor. One of the benefits of betting at Prime Sportsbook is their reduced juice on their lines. Where most books use a standard -110, they use -108. Reworking the example from above:
$108 to win $100 on Heads
$108 to win $100 on Tails
$108 + $100 to the winner; $8 to the sportsbook. 8/216 = 0.037 or 3.7%
Win More When You Win - Lose Less When You Lose
Sports betting is a low-margin business. Over the course of thousands of wagers, sportsbooks make their money by having that small theoretical margin on every bet made. The more you wager and the more frequently you wager, the greater the juice impacts you.
Remember when I mentioned sports bettors often say “the loser pays the juice?” Well, the inconvenient truth is that you better be ok with losing, because sports bettors lose a lot. Even the best sports bettors can’t expect to win more than 55-57% of the time. When you’re dealing with such tight margins, the difference between -110 and -108 is big. A -110 bettor needs to be right 52.4% of the time to turn a profit. While a -108 bettor gets it a little easier at 51.9%.
Let’s say you’re able to hit 55% on your picks. You wager to win $500 per game. After 1000 games, you’re, as expected, 550-450. You’d be +$27,500 against a -110 line, and +$32,000 against a -108 line. Sure, you print money with your picks, but would you turn down an extra $4,500? Me neither.
The Power of Synthetic Hold
If you read the great book The Logic of Sports Betting by Matthew Davidow and Ed Miller, you’re familiar with the concept of Synthetic Hold. For those of you who haven’t, Synthetic Hold is when you take the best price in the market on both sides of a wager to identify beatable lines.
If Sportsbook A has
Cleveland Guardians +220
New York Yankees -260
While Sportsbook B has
Cleveland Guardians +250
New York Yankees -300
You’d take the CLE +250 from B, and NYY -260 from A. The best price from either book. The theoretical house edge on this synthesized market between the two books is only 0.79%. Very low! This is then, theoretically, an easier market for you to beat because you’re playing against less of a house edge.
The advantage of having Prime Sportsbook in your rotation of books is their low juice model is going to make them be one side of that synthetic market very often. In Ohio and New Jersey you have a lot of sportsbooks. There’s a very good chance Prime ends up in some arbitrage situations for you due to their low juice.
To some, arbitrage is the Holy Grail of sports betting. Place two opposing sports bets at different sportsbooks and guarantee a profit with no risk. Others like having some risk in their betting.
It’s one of the reasons I can’t wait to have Prime Sportsbook on our odds screen at Unabated.com. We identify low synthetic hold and arbitrage opportunities for bettors. It’s great for bettors regardless of their risk tolerance.
Lower Juice at Sharp Sportsbooks Hits Different
Prime Sportsbook has to be sharp with their bookmaking in order to survive with lower juice. The thinner the margins for the sportsbook, the sharper they need to be in adjusting their lines. There are going to be many aspirational bettors that believe they can’t beat a book like Prime. Some won’t even try. I actually think Prime is exactly the type of sportsbook you should try to beat.
The opposite of a sharp sportsbook is a recreational sportsbook who relies on ads and gimmicks to draw in bettors. You know who they are. At the recreational sportsbooks, I pick off the low-hanging fruit or take advantage of their poor bookmaking.
With a bigger edge at a recreational sportsbook, the juice doesn’t scare me. I can beat those sportsbooks if I can get into the long run. And that’s a big if because those sportsbooks are quick to limit or restrict me.
However, in a sharp book, like Prime, the juice does matter. Because it’s very likely my edge is smaller and the juice has a greater impact. If I get an edge though, it’s more sustainable. I don’t have to sweat whether there will be lower limits next time I try to bet.
Capitalism Breeds Innovation
One more slightly esoteric point. The average American sports bettor is currently not price sensitive. They don’t seek out the best price when betting sports. As a result, we have these large flashy sportsbooks fleecing consumers and they’re none the wiser.
In many markets, there’s still room for growth in sports betting. Room for someone to come in and do it better than it’s being done and win over business. That’s what makes capitalism such a powerful economic driver. Capitalism breeds innovation. Innovation benefits consumers.
You may not consider lower juice to be a cutting-edge innovation. However, if it is successful, other operators will look to copy it or improve upon it. This is why I wrote this article for Prime. I want to encourage bettors to support lower juice options to stop the current trend of higher house edges in sports betting. We can make a more sustainable sports betting experience with our bets and where we encourage others to play.