Vig

A bookmaker offering -110 on both sides of a coin-flip market is not offering true 50/50 odds. The -110 price implies a 52.38% win probability, so both sides sum to 104.76%. That extra 4.76% is the vig. To break even at -110, a bettor must win 52.38% of bets, not 50%. The vig functions as a tax on each transaction and represents the primary revenue source for traditional sportsbooks. In regulated exchange models, the same economic role is played by explicit Trading Fees rather than embedded price distortions, which makes prices as probability signals cleaner and easier to interpret. Calculating the vig across a market helps traders assess whether they are getting fair value relative to their estimated true probability.

Vig varies substantially across market types. Traditional bookmakers may charge 5-10% on major events and considerably more on minor markets. Kalshi, as a CFTC-regulated exchange, charges per-contract fees rather than embedding vig in prices, which keeps implied probabilities more accurate. Polymarket uses a fee-on-settlement model on some markets. For traders, removing vig from odds to find the fair Midpoint Price is an essential step in calculating Edge. The Overround is the related concept that expresses the same distortion from the probability side rather than the cost side. Reducing exposure to vig through Line Shopping and choosing low-fee venues is one of the clearest ways to improve long-run Expected Value in any prediction or betting market.