What is Over-Round and How do Sportsbooks Make Money?

What is Over-Round and How do Sportsbooks Make Money?

Understanding the term “Over-Round”, and how Australian sportsbooks make money, is a crucial element to becoming a successful sports betting punter.

Over-Round is what guarantees sportsbooks profit in the long run. In a nut shell, it’s the margin that they build into pricing, however it may not always be obvious when you look at a betting market. Here’s how it works.

Imagine a sporting event with two teams, let’s say it’s Richmond against Melbourne in the AFL. Sports traders, whether they work for a bookmaker or they are professional punters, might estimate that Richmond will win this match two out of every three times, or 66.6%. Now to frame that percentage as betting odds, it equates to $1.50, since 1 divided by 1.50 is 66.6%. So that means that Melbourne will win 33.3% of the time, which is 1 in 3 times, or betting odds of $3.00.

So we’ve worked out a fair betting market is Richmond $1.50 and Melbourne at $3.00. This is a fair market because when you add 66.6% and 33.3% together, you get 100%. So the “Over-Round” is 100%. Punters are getting paid out true odds that the event occurs, so if the markets were always like this, neither punter nor bookmaker will actually make any money over the long term.

The way sportsbooks make money is to tweak the odds slightly in their favour. For the above scenario, they might offer Richmond at $1.43 and Melbourne at $2.70. Here’s how that tips the scales in their favour:

True Odds
Richmond $1.50  (66.6%)
Melbourne $3.00  (33.33%)

Over-Round 100%

Sportsbook Odds
Richmond $1.43  (70%)
Melbourne $2.70  (37%)

Over-Round 107%

So if the Over-Round is more than 100%, then the sportsbook know they will ALWAYS make a profit, regardless of the result, as long as punters back each team in proportion to their true chance of winning. Of course punters don’t always do that, so that’s why sportsbooks will adjust odds depending on the weight of money they’ve received on a certain side of the book. This helps them to balance their books and stay in profit.

Sportsbooks ALWAYS have an Over-Round greater than 100% on EVERY betting market.

So if the sportsbooks are guaranteed to profit, how can punters actually win money?

Sharp punters will look for situations where they think the sportsbook sports traders have estimated the odds incorrectly, and are offering value for an event to occur.

The other way is to ensure that you are getting the best odds possible for your bet, and most of the time, that’s going to be by using the Betfair Exchange.

You see, Betfair isn’t like a regular sportsbook. They do not factor Over-Round into their prices. Because Betfair is a peer-to-peer betting exchange, the odds are set by other punters according to what they think the true odds are. The Betfair Exchange markets are ALWAYS going to be close to true odds of the event which gives punters the best price possible.

Betfair doesn’t make its money through Over-Round. Instead, Betfair charge a commission of between 5-10% on winnings, depending on the sporting or racing code. This will often provide a better value bet for punters than traditional sportsbooks who may set markets with horrible Over-Round of 120% or even more.

It’s important for all punters, whether new or experienced, to be able to spot Over-Round in a betting market and understand when you are getting poor odds. Look for the value on the Betfair Exchange before you place your next bet.

Learn more about Betfair at the Betfair Hub, or click on the banner below to join Betfair today!

 

Betfair

TIPS

Ballarat Racing Tips: Wednesday, September 30th

It's a rare midweek meeting at Ballarat for metropolitan racing in Victoria on Wednesday, leading up to Turnbull Stakes day this weekend! Trent Crebbin has studied the form for all eight races and provided his preview and betting tips below! read more

2020 PGA Tour: Sanderson Farms Championship Betting Tips

We are back this week as the PGA Tour heads to the Country Club of Jackson in Mississippi for the annual Sanderson Farms Championship. We have a full preview and betting tips for the upcoming event here read more

Horse Racing Tips: Tuesday, September 29th

After tipping three winners from his four selections on debut last week, The Horse is back with another set of bets for today's racing at Grafton and Swan Hill! Check out his preview and tips here! read more

Kensington Racing Tips: Wednesday, September 30th

Sydney metropolitan racing takes place on the Kensington track at Randwick this Wednesday, September 30th, with seven races on the card. Joshua Reed steps in for his first midweek preview and he's provided his thoughts on every race here! read more

ARTICLES

Best Australian Sports Betting Sites

The best Australian sports betting sites ensure safe and successful online betting for punters. Here's our list of the best betting options in Australia. read more


Performance Ratings & Pricing with Julian Vallance with Sportsbet

Julian Vallance from Sportsbet takes us through some of the key factors which he uses with pricing upcoming horse races such as performance ratings. Check out his video from Sportsbet here. read more


What is Over-Round and How do Sportsbooks Make Money?

Over-Round is an important concept for both punters and sportsbooks. It's how Australian sportsbooks make money! All punters should understand over-round, how to spot it, and how to find better value on the Betfair Exchange. read more


Betfair Commissions and Charges

Ever wondered why you can get such great odds at Betfair in comparison to other online bookmakers? We break down why that is the case and why Betfair isn't just for professional punters here read more


BLOGS

Palmerbet's 40 Days of Value is Here!

The weather’s getting warmer and the horse racing schedule is heating up – that means Spring is here. Palmerbet is doubling down on the best time of the year with ‘40 Days of Value’, spring-loaded with bigger odds, hot tips and other offers to make it a Spring Carnival season to remember for punters. read more


2020 AFL Brownlow Medal Votes Round 18

That's it! The 2020 AFL regular season has come to an end and Brisbane's Lachie Neale has surely done enough to secure the 2020 Brownlow Medal with another brilliant game in Round 18. Let's take a closer look at our Round 18 Brownlow Medal vote predictions! read more


2020 AFL Brownlow Medal Votes Round 17

There's just one more round to go in the 2020 AFL season. Round 17 has completed and the Brownlow votes are locked away. It was a quiet round for those at the top of our Brownlow leaderboard, but there were a couple of stand out performances this weekend. Let's take a closer look at each match with our Round 17 Brownlow vote predictions. read more


2020 Brownlow Medal Predictions & Leaderboard

2020 AFL Brownlow Medal predictions and vote tracker. Our AFL experts offer round-by-round Brownlow votes including a rolling Brownlow leaderboard and tracking for the 2020 AFL season. read more


PlayUp

BetDeluxe