Who pays the vig: The loser or the winner??
 

I have seen this discussed and i would really like to know your thoughts on this. If we have two guys who place a bet with a bookie. Each lay -110 on oppossite sides. The loser loses all of his 110, but the winner only wins $100. Who pays the juice? I know the actual answer. But, I want to see what you guys think and maybe I am wrong (doubtful [img]/images/graemlins/smile.gif[/img] ).

craig

Re: Who pays the vig: The loser or the winner??
 

I've always heard it's the loser. I haven't put much thought into it thou... interested to hear your take.

I hate lossing [img]/images/graemlins/tongue.gif[/img]

Re: Who pays the vig: The loser or the winner??
 

This is copied from another site, but it was a tout site and the one article that might be correct. If anybody really feels I should link the site I will.

[ QUOTE ]
The bookmaker's rather unique commission has no precise English definition, but the French word for it is "vignes." American gamblers have long since converted "vignes" to "vigorish," or to just plain "vig." Nevertheless, the bookmaker's fee is as much a commission as a broker's fee for handling a stock transaction or a Realtor's fee for handling a real estate deal. To account for this commission on standard pointspread wagers or over/under wagers, at traditional bookmakers for every $10 a bettor wants to win he is required to risk $11 - to "lay" $11. (Many internet bookmakers now charge less, allowing bettors to risk as little as 10.5 to win 10, but for our purposes here we will use '11-10' bets.) These 'eleven-ten' bets lead many gamblers to conclude that they are paying the bookmaker a commission of 10 percent if they lose a bet, but that they pay nothing if they win.

That's not correct. Here's how it actually works: Say two bettors each risk $110 with the same bookmaker on opposite sides of the same proposition, each bettor trying to win $100: The bookmaker receives a total of $220 from the two bettors. One bettor wins, one bettor loses, and the winner picks up a total of $210; - the $110 he put at risk, plus his $100 profit. That leaves the bookmaker with $10 gross profit as his vigorish on the deal. The bookmaker kept $10 of the $220 total amount risked.

That's a service charge of 4.55 percent. Had the two bettors each risked $110 against the other without using the services of the bookmaker, the winner would have walked away with $220 instead of $210. The bookmaker kept 4.55 percent of that $220. The amount risked by each bettor was $110; not 100 dollars.

($10 divided by $220 = .0455)

So the bookmaker does, indeed, charge 4.55 percent of the total amount put at risk by both bettors...But be sure to note which bettor paid both bettors' share of the vigorish. It was not the loser. The loser - since he lost the bet - would have lost whatever he put at risk, with or without the services of the bookmaker. The winner paid. The winnings, which would have been $110 without using the services of the bookmaker, were shorted by ten dollars - 9.1 percent.

($10 divided by $110 = .090909091)

The winner got back only 191 percent of the amount he put at risk.

($110 x 1.90909091 = $210)

This is also the way it works in virtually all other casino games, such as craps, roulette, baccarrat, blackjack, and even slot machines. When a loser loses, he loses what he puts at risk no matter whether the house charges zero vigorish or ten times the vigorish they actually do charge. In roulette, for example, someone betting on an 'even-money' proposition (red or black, high or low, odd or even) and losing, loses his bet, whatever he risked, period.

On the other hand, someone winning against an 'even-money' roulette proposition does not get paid the 'fair' odds of 10-to-9, but only 1-to-1. (There are 20 ways to lose an even-money bet at roulette and only 18 ways to win. The odds are 10-9 against you.) In all these table games, the winners pay the vigorish.

Of course, in a larger, more philosophical sense losers not only pay the vigorish but also the light bills of the casino and the salaries of the casino employees and all the other expenses of the casino. But we're not addressing philosophy here. We're addressing how the business of gambling actually 'works'. This is no place to play with words and semantics. Vigorish is deducted from winnings.

It is important to understand this point. You can be sure most bettors don't. In effect, the bookmaker becomes a partner of the winning bettor. Understanding this point is important when figuring the real cost of various sports betting opportunities, including parlays. (See our article, Parlays & Profit.) For example, laying 12-to-10 is a one-way ticket to the poorhouse. Laying 12 to win 10 costs the winner a whopping 16.67% of his winnings.

The illustration accompanying this text (above) shows precisely the cost of vigorish when dealing with 11-10 bets. Notice that since the winning bettor is always charged for the vigorish, the higher the percentage of bets won, the higher the percentage of vigorish paid. It might help if you picture what happens this way: If you lost all 100 of 100 bets, you would lose 100 percent of the amount put at risk - with or without the services of a bookmaker - but if you won all 100 of 100 bets, you would win only 91 percent of the total amount you were required to risk.

In those two extreme cases, the 0-100 loser would have played for 'free' while the 100-0 winner would have paid more than 9 percent in vigorish. Notice also that even though the bookmaker's commission is 4.55 percent, it is only the bettor who wins exactly half his bets who pays precisely 4.55 percent in vigorish. Everybody else pays something different. In order to break even you must win 53 percent of your bets - assuming the sizes of all your bets are exactly the same - and in order to win 53 percent of your bets, you must pay 4.82 percent in vigorish. Successful sports bettors who win more than 55 percent of their 11-10 bets typically pay more than 5 percent in vigorish.



[/ QUOTE ]

Re: Who pays the vig: The loser or the winner??
 

That's a service charge of 4.55 percent.

I knew that! Really, I must have ready that about 20 times... "Education of a Sports Bettor" (for one) harps on this

Re: Who pays the vig: The loser or the winner??
 

In my opinion, it's just a matter of semantics. You can really look at it either way.

When you risk $110 to win $100 you can either look at it as:

a.) a $110 bet which the winner pays a $10 vig charge.

-or

b.) a $100 bet which the loser pays an additional $10 vig charge.


Since this vig charge is paid up front and is lumped together with the actual wager, to me a.) makes more sense. If I put down $110 I prefer to view that as a $110 wager, not a $100 wager with a prepaid $10 vig charge in case I lose. It makes more sense to me that way, but in reality they are equivalent and equally valid. I'll make a separate post which shows how you can view the example in the article the other way.

Re: Who pays the vig: The loser or the winner??
 

As I stated above, I tend to agree which the viewpoint presented in the article quoted by Craig that the winners pay the vig. However, I don't think it an indisputably "correct", but rather a point-of-view and here's why:

[ QUOTE ]
The illustration accompanying this text (above) shows precisely the cost of vigorish when dealing with 11-10 bets. Notice that since the winning bettor is always charged for the vigorish, the higher the percentage of bets won, the higher the percentage of vigorish paid. It might help if you picture what happens this way: If you lost all 100 of 100 bets, you would lose 100 percent of the amount put at risk - with or without the services of a bookmaker - but if you won all 100 of 100 bets, you would win only 91 percent of the total amount you were required to risk.

In those two extreme cases, the 0-100 loser would have played for 'free' while the 100-0 winner would have paid more than 9 percent in vigorish. Notice also that even though the bookmaker's commission is 4.55 percent, it is only the bettor who wins exactly half his bets who pays precisely 4.55 percent in vigorish. Everybody else pays something different. In order to break even you must win 53 percent of your bets - assuming the sizes of all your bets are exactly the same - and in order to win 53 percent of your bets, you must pay 4.82 percent in vigorish. Successful sports bettors who win more than 55 percent of their 11-10 bets typically pay more than 5 percent in vigorish.

[/ QUOTE ]

The above is a valid viewpoint, however you can look at a bet of $110 risked to win $100 as a $100 bet with a prepaid $10 service charge "deposit" which is returned if you win. In this case, the 100% winner would win all his $100 bets and have all his $10 "vig charge deposits" returned to him, while the 100% loser would lose all his $100 bets and the bookmaker would keep all the $10 "vig charges". From this point of view, the 100% loser pays all the vig, the winner pays nothing.


As I said, to me this seems a bit more convoluted way of looking at it, but not wrong. In reality it really doesn't matter which way you look at it, everybody pays vig, it's just a cost of doing business.

Re: Who pays the vig: The loser or the winner??
 

Both.

Re: Who pays the vig: The loser or the winner??
 

I think the best example is playing roulette. If you and a friend each place 10$ on different numbers and his doesn't hit, he just loses his 10. But, if you hit yours you get $360 (I don't know roullette odds well enought). But, you should have gotten back $380. So, did you friend pay or did you? In this example, it is obvious that you paid.

craig

Re: Who pays the vig: The loser or the winner??
 

[ QUOTE ]
I think the best example is playing roulette. If you and a friend each place 10$ on different numbers and his doesn't hit, he just loses his 10. But, if you hit yours you get $360 (I don't know roullette odds well enought). But, you should have gotten back $380. So, did you friend pay or did you? In this example, it is obvious that you paid.

craig

[/ QUOTE ]
I'm not sure, I think you could apply Deuces Up's logic here too. You and your friend are essentially each placing a $9.47 bet at 38-1 odds, and prepaying a 53 cent service charge. You win, so you get the service charge back, plus win $360 on the bet. Your friend loses his $9.47, and the casino keeps the service charge as well, for -$10 net.

It's still just semantics, although the idea of a "prepaid service charge for losing" that is returned if you win does stretch credubility a little. I think it's valid from a technical sense though. In the end, unless you're planning on winning (or losing) every bet you place, it doesn't matter. If the winner pays all the juice, and you win half the time, you pay all the juice half the time, or half of the total juice. On the other hand, if the loser pays all the juice and you win half the time, you pay half the juice half the time, or half of the total juice.

In the end, I think the most realistic perspective to take for a serious sports bettor, is that every time you place a bet at -110, you are paying 4.54% juice, win or lose. On average, that will end up being true, and it most accurately describes the effect of the juice on your bankroll.

All the rest of this discussion is just logic puzzles and semantics, which I love arguing as much as anyone, but aren't particularly relevant to the topic.

Re: Who pays the vig: The loser or the winner??
 

[ QUOTE ]
I think the best example is playing roulette. If you and a friend each place 10$ on different numbers and his doesn't hit, he just loses his 10. But, if you hit yours you get $360 (I don't know roullette odds well enought). But, you should have gotten back $380. So, did you friend pay or did you? In this example, it is obvious that you paid.

craig

[/ QUOTE ]

Or did you each place a bet of $9.46 + $0.54 fee for placing the bet [img]/images/graemlins/smirk.gif[/img] (fee returned on winning bets)?

(roulette only pays 35-1)

Edit: JoeBobJim beat me to it.