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

[plus_man]

You are right BobJoeJim. If you want to look at it as a bet where you're risking a fixed amount, the winner pays. If you want to look at it as betting to win a fixed amount, the loser pays. On any bet there is risk to both sides so both parties pay.

[Nash_Clown]

Both pay. Both parties enter into a proposition that will result in the winner getting 100 returned for a 110 wager. Assuming there is a 50/50 chance on the outcome, the bet is negative EV for both parties.

It's like when Sklansky writes that if you were paid 2-1 for a fair coin toss, you win .5 bets every time the coin is tossed, regardless of the immediate outcome. Thus, even when you lose, you win [img]/images/graemlins/wink.gif[/img] Additionally, when your opponents make -EV plays against you in poker(or other forms of gambling) you still 'win'.

If you win when your opponents make -EV plays, then when you make -EV plays, your opponents win. In the case of the bookie, both players are taking -EV and the bookie wins-- as both bettors lose EV, with every bet. Therefore both play the vig... it's the EV that's lost when making the bet.

In an even money proposition that pays $100 for a $110 bet, both bettors have an EV of -$5

-$5 + -$5 = -$10. That $10 is the vig!!!

[NajdorfDefense]

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You can argue, mathematically, that only the winner pays, OR that only the loser pays, and be technically "right" either way. It's all semantics.

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Wrong. If you make 10 bets and lose 10 bets and go broke, when did you pay the vig again?

If you make 10 bets and win 10 bets, when do you get you 50% reduction in vig?

Your answer is simple, understandable, and yet totally wrong.

Naj [img]/images/graemlins/diamond.gif[/img]

[Performify]

I don't usually make this sort of post. Because anyone is welcome to their opinion. I value and respect you all as human beings, content contributors, yadda yadda. But...

But anyone who believes that (a) the losers pay the juice or (b) both sides pay the juice has a very deep and very fundamental misunderstanding of the nature of gambling as a whole and sports wagering specifically.

And i'll throw this back out there in a hope that you might pick up on the way things actually work.

i used the line in jest in my post above, but its actually very serious. The winner pays 100% of the "vig", and its not even close. and if you still don't see why:

Lets take this to craps, because it provides a helpful example. You go to a craps table and place a bet on the hard ten. For those not familiar with craps, this means you are betting that the dice will come exactly 5 + 5 to make ten, before either a "soft" ten (6+4) or any combination of seven (6+1, 5+2, 4+3) is thrown.

You place a $100 bet on Hard Ten. The bet pays $8 for every $1 you wager, so you're risking $100 to win $800 (it actually pays 7:1 plus your original $100 returned, so "seven to one" or "eight for one")

This seems like a pretty decent bet, right? I put down $100 and i get back $800 if I hit.

But we're a little smarter than just seeing a longshot bet and thinking its automatically a good deal. So what are the odds of a hard ten actually paying off?

well there is exactly one way you can win this bet: five on the first die and five on the second. There are, however, eight combinations by which you can lose: 6-4, 4-6, 6-1, 5-2, 4-3, 3-4, 2-5, 1-6. so there are eight ways to lose, and one way to win. Every other throw of the dice doesn't matter at all. So the true odds of us winning this throw are 1 in 8. Or 1:8.

if the house was running a neutral EV game, not taking a percentage as profits, placing a bet on hard ten would pay out 8:1 (or "nine for one", winning eight plus our original bet back).

But the house doesn't run a neutral EV game. Craps is a -EV game overall: because we're not being paid 8:1, we're being paid 7:1, remember?

So you and I both walk up to two different craps tables next to each other, and we both place a $100 hard ten bet on our respective tables. You're table is lucky enough to have a hot roller, and the first roll your shooter bangs out a hard ten. My table, not so lucky: the shooter rolls a seven on their first try.

So what happens?

I lose my $100 bet. I put my bet out there for an 8:1 occurance, the eight side of the equation came up, and I lost. From an EV perspective, my game behaved exactly as expected. I risked $100 and i'm going to lose my bet - my whole bet, and nothing but my bet - eight out of nine times that my wager is graded.

But on your table, you won! the dealer slides you eight black chips, paying you out at 7:1 (again, or "eight for one"). You rifle through the chips, happy at your good fortune. But then you think to yourself, hey, self - shouldn't there be one more black chip here? After all, based on the odds of this happening, shouldn't i have gotten nine black chips back? Then a lightbulb shines above your head, and you realize: the house has taken a percentage of your winnings, as a fee for allowing you to wager. If the house allowed both sides to bet and paid both sides evenly (i.e. neutral EV) the house wouldn't really make any longterm profit: they'd take 100% of the bet of the loser and pay 100% of the loser's money to the winner.

But the house doesn't do that. They don't get pay for all those pretty lights and nice rooms and $1.99 prime ribs based on moving money from the loser to the winner.

They take the loser's money, and they pay it to the winner. But first, they take a cut of the money from the winner. in this case, they're taking 11.11% of the profit from the winner, as a cost of doing business. This 11.11% is the "vig".

And, boys and girls, 100% of that vig comes out of the pocket of the winner, via the mechanism of the house paying the winner less than they "deserve" to win.

Now some people feel that's not the case for sports betting. if we're both betting opposite sides of a -110 line it feels like we're both wagering $100 to win $100 and we're paying a $10 "service charge" for the privledge, right? Wrong. It works exactly like the craps example. We're wagering on something that's a 50-50 proposition, in essence. we should be paid at 1:1. For every dollar we wager, we should be paid a dollar in return. So when we step up to the sportsbook and wager $110, we should be paid, from a true neutral expected value perspective, $110 if we win and lose our bet if we lose. And if that happened, just like in the craps example the house wouldn't make any money. They'd just take the money from the loser and hand it to the winner. But just like in the craps example, the house doesn't do that. They take the money from the loser, they take a percentage of the profits as a "transaction fee", and then they pay the winner.

The loser doesn't have to pay an extra fee. The winner gets paid less than they "deserve" to win. this transaction fee is directly taken from the pockets of the winner. ergo... the winner pays 100% of the vig.

Now do you see why? [img]/images/graemlins/grin.gif[/img]

This is also why, as a second-level sports betting topic, the more you win the more you pay (as a percentage) in fees. For example, if you had a system which won 80% of its games ATS, you'd actually "pay" a much more significant ammount of vig than someone who won only 55% of their games. its actually more -EV (in terms of actual payout versus expected payout) to win 80% of your games than it is to win 55% of your games. But we'd all enjoy having that "problem", i think. That's a topic for another day.

[legend42]

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Now, if someone can come up with a similar situation in which the winner can't tell which game had the juice, I'll agree that both sides pay the vig.

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Okay. You and I both call up the same bookie, and bet $100 on 5 games, taking different sides. You go 5-0, the bookie comes by and gives you $500. I go 0-5, when the bookie comes to collect and I go to pay him $550 he says "I forgot to tell you I was running a no-juice special on the Dallas game, so you only owe me $540."

This can go round and round, and I'm with those who think it's pretty pointless.

[homedog]

Interesting topic.

I bet Detroit -500 last night to beat Minnesota. Now lets say that somehow my sportbook got no action on the Twolves side. So the game was played, the Pistons won, and I made my 100 profit when I was returned 600.

Yes I "paid $500" in the risk I assumed. But since I won my wager, the house made no money on this specific transaction.

Now we can argue on the value of this bet. In the long run if Pistons only win this game 3 out of 4 times then it's a losing play....but what if Pistons win this game 7 out of 8 times? In the 2nd scenario, I am not paying a vig as a winner. (Ie. if the game should have been Pistons -900).

I don't think we can verify who (winner or loser) is paying the vig without knowing what the true value of the wager was.

I understand the craps examples. But sports is much more subjective.

Or to put it another way, if I was offered Steelers in the super bowl +17 points at 110 to win 100, am I still paying a vig if I win that bet?

[plus_man]

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The loser doesn't have to pay an extra fee. The winner gets paid less than they "deserve" to win. this transaction fee is directly taken from the pockets of the winner. ergo... the winner pays 100% of the vig.


[/ QUOTE ]
But couldn't one just as easily say the loser loses more than he "deserves" to lose. After thinking more about this, I have changed my mind. Previously, I thought both sides paid but now I'm thinking the loser always pays. Before you lay any money on the table, you know that there will be a commision involved. You can win any amount you want. Just plug it in the "to win" box at your sportsbook. And if you win you win that amount and you get all your money back. You lose nothing. The person who pays is the one who paid the extra risk amount on the loser before the event took place. The sportsbooks, not knowing the loser I assume, have to overprice both sides. Everyone knows this. This is done before anything is put out there to be wagered on. One can say that the winner deserves more money when he wins but not really. He doesn't "deserve" the amount that was "overcharged" to the loser. Sorry about all the "quotes"

[BobJoeJim]

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I don't usually make this sort of post. Because anyone is welcome to their opinion. I value and respect you all as human beings, content contributors, yadda yadda. But...

But anyone who believes that (a) the losers pay the juice or (b) both sides pay the juice has a very deep and very fundamental misunderstanding of the nature of gambling as a whole and sports wagering specifically.

...
Now some people feel that's not the case for sports betting. if we're both betting opposite sides of a -110 line it feels like we're both wagering $100 to win $100 and we're paying a $10 "service charge" for the privledge, right? Wrong. It works exactly like the craps example. We're wagering on something that's a 50-50 proposition, in essence. we should be paid at 1:1. For every dollar we wager, we should be paid a dollar in return. So when we step up to the sportsbook and wager $110, we should be paid, from a true neutral expected value perspective, $110 if we win and lose our bet if we lose. And if that happened, just like in the craps example the house wouldn't make any money. They'd just take the money from the loser and hand it to the winner. But just like in the craps example, the house doesn't do that. They take the money from the loser, they take a percentage of the profits as a "transaction fee", and then they pay the winner.

[/ QUOTE ]
Performify, those of us who are arguing that both sides pay understand the craps example. It's just a more detailed version of the same winner pays argument that has been given many times in this thread. And it's true, mathematically. The flaw in your reasoning is to assume that because it's "true" that the winner pays, it must be "false" that the loser pays. You say the idea of a "service charge" is wrong, but mathematically you can argue that it is the case, and the numbers work. Whether you consider it a "service charge" that is returned to the winner, or a "transaction fee" that is taken out of the winner's cut, is PURE SEMANTICS.

In the end, the sports book takes its "vig" by trying to make EVERY BET THEY OFFER be negative EV. (Of course they fail sometimes, and the purpose of this forum is to exchange ideas on how to catch them in the act when they do, and profit from it, but that's a sidenote.) The vig isn't taken from anyone specific, it's a GENERAL fee, that they charge to ALL their customers, by offering -110 lines on even propositions. In the end, you're placing a -110 bet on something that you and the book agree is probably 50/50 to happen, and THAT is when you pay the vig. It doesn't matter if you go on to win or lose the bet. You already paid, by accepting -EV.

EVERYONE PAYS THE VIG!

And with all due respect, my friend, if you don't understand that then it's you whose fundamental understanding of gambling is flawed.

[homedog]

Gambler #1 goes to a casino and loses a $110 bet trying to win $100.

Gambler #2 goes to the same casino the next day, also risks $110 to win $100. But Gambler #2 wins his bet.

Now the casino has to pay him off.

So what do they do?

They give him $100 from the $110 they won yesterday and are left showing a $10 profit.

If you were literally tracking the bills, you'd see that $10 came yesterday from Gambler #1.

The loser.

One more example:
Two guys want to bet on the Super Bowl. They each want to win 100 dollars. They each go to a bookie and give him 100 dollars to hold. After the game the bookie gives the winner the 200. Then the bookie makes a phone call to the loser. And says "YOU OWE ME 10 BUCKS!"

Who pays the vig? Again, the loser.

[plus_man]

You weren't shorted anything. You have no right winning the 10 bucks. That is the vig. That is the amount overcharged to the losing bettor. When you made the bet at -110 you knew before the event started that you would not be winning what you laid down. The extra 10 risked by you is what your sportsbook requires before they'd take your bet.