Vigorish

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Vigorish (also known as juice, under-juice, the cut, the take, the margin, the house edge or the vig) is the fee charged by a bookmaker for accepting a gambler's wager. In American English, it can also refer to the interest owed a loanshark in consideration for credit. The term came to English usage via Yiddish slang (Yiddish: וויגריש‎, romanized: vigrish) which was itself a loanword from Russian (Russian: вы́игрыш, romanized: výigryš, lit. 'gain, winnings').^[1][2]

As a business practice it is an example of risk management; by doing so bookmakers can guarantee turning a profit regardless of the underlying event's outcome. As a rule, bookmakers do not want to have a financial interest creating a preference for one result over another in any given sporting event. This is accomplished by incentivizing their clientele to wager offsetting amounts on all potential outcomes of the event. The normal method by which this is achieved is by adjusting the payouts for each outcome (collectively called the line) as imbalances of total amounts wagered between them occur.

Within the mathematical disciplines of probability and statistics this is analogous to an overround,^[3] though the two are not synonymous but are related by the connecting formulae below.^[4] Over round occurs when the sum of the implied probabilities for all possible event results is above 100%, whereas the vigorish is the bookmaker's percentage profit on the total stakes made on the event. For example, an overround of 20% results in 16.66%^[a] vigorish. The connecting formulae are

$${\displaystyle v={\frac {o}{1+o}}\quad {\text{ and }}\quad o={\frac {v}{1-v}}}$$

where v represents vigorish and o represents over round.

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