What is vig?
A sportsbook’s vig is its built-in profit margin. Other words for vig include juice, over-round, and hold. Vig makes the payouts less generous than they should be so that sportsbooks can make money. The sharpest sportsbook in the world, called Pinnacle, has the lowest vig when compared with all other sportsbooks. On most very liquid markets its standard spreads and moneyline offerings have a vig of less than 2% compared with around 8% for other sportsbooks.
For professional sports bettors, Pinnacle's low-vig lines represent the sharpest market odds available. Its rapidly adjusted prices based on smart money provide the most accurate market probabilities. Even at Pinnacle there is a built-in vig or edge for the book. So to utilize its efficient market lines, bettors must first "de-vig" its odds to find the true implied probabilities.
These de-vigged Pinnacle probabilities can then be compared against the slow-moving soft lines at other sportsbooks to find value betting opportunities. There are four popular de-vigging methods that allocate Pinnacle's vig differently.
1. Additive method
The Additive method divides the total vigorish equally across all potential outcomes in the market. This approach accounts for the tendency of bettors to overbet longshot underdogs and underbet favorites. However, the Additive method can sometimes create infeasible negative probabilities for longshot outcomes.
2. Multiplicative method
With the Multiplicative method, the vigorish is spread proportionally based on each outcome's implied probability from the initial odds. Higher probability outcomes (favorites) receive a larger allocation of the vig. While simple to calculate, this method may not accurately reflect real-world betting behavior.
3. Power method (Recommended ⭐️)
The Power method is an extension that raises the implied probabilities to a constant power value. This ensures the de-vigged probabilities remain within the valid 0-1 range, avoiding infeasibilities. However, the Power method may overadjust probabilities for longshot outcomes while underadjusting for middle-range odds.
4. Shin method
The Shin method utilizes an iterative algorithm specifically designed to correct for the favorite-longshot bias in betting markets. It generally provides improved predictive accuracy compared to other de-vigging methods. For markets with just two outcomes, the Shin method is essentially equivalent to the Additive approach.
Automatic de-vigging configurability
The great advantage for users is that they don't need to de-vig Pinnacle's lines themselves. Our service handles that process, providing the fully de-vigged probabilities. Users can configure which de-vigging method to utilize at the platform level - Multiplicative, Additive, Shin, or Power. This allows implementation of the most suitable overall de-vigging technique based on personal preferences and past performance across all markets. With the heavy lifting of de-vigging done automatically, users can focus on what really matters - finding value in the mispriced markets.
Pinnacle’s NVP (No Vig Price)
With every alert and on every market you will see a ‘NVP’ which is the price after the vig has been subtracted using whichever method you have selected.
This is an extremely important data point as it is the price you should be aiming to beat in order to have a positive expected value bet. In the example above the NVP was +185 meaning if you were offered odds of +200 then that is a bet you should take.
The NVP will vary significantly based on what method you select so it’s important that you choose the one that is going to be most accurate. In the next section I will explain which method we recommend you use if you are new to de-vigging.
Our recommended method: The Power approach
While there is disagreement over which de-vigging method is best, we recommend the Power method for most users. This approach accounts for the favorite-longshot bias that is prevalent in sports betting markets. The longshot underdogs tend to be overbet, meaning sportsbooks apply more vigorish to that side of the market. The Power method adjusts for this behavior, raising the probabilities to a constant power value.
It also ensures the de-vigged probabilities remain within the 0-1 range, avoiding infeasibilities that can occur with other techniques like the Additive method producing negative probabilities for longshots. By accurately capturing real-world betting patterns, the Power method provides a sound de-vigging approach for turning Pinnacle's sharp lines into a powerful edge-finding tool.
Summary
- Pinnacle offers the sharpest lines, but the vigorish must be removed via de-vigging
- Four de-vigging methods allocate the vig differently: Multiplicative, Additive, Shin, Power
- We recommend the Power method to account for favorite-longshot betting biases
- Users can configure the de-vigging method at the platform level
- Accurately de-vigged Pinnacle lines allow finding value on softer sportsbook markets
This guide was aided by the research of: Stephen Clarke, Stephanie Kovalchik, and Martin Ingram: "Adjusting sportsbook’s Odds to Allow for Overround." American Journal of Sports Science, Vol. 5, No. 6, 2017, pp. 45-49. doi: 10.11648/j.ajss.20170506.12
