Quick answer: Sportsbooks set odds by estimating the true probability of an outcome, then shading the price to add a margin called the vig, so the implied probabilities total more than 100%. They move lines based on money and information, not on who they think wins. On a standard −110 market the vig is about 4.5%, meaning you must win ~52.4% just to break even.
Odds are not predictions — they are prices built to make the book money. Understanding how they are set, and what the vig costs you, is how you stop being the product and start finding value. Here is how it really works.
How do sportsbooks set odds?
Sportsbooks set odds by first modelling the true probability of each outcome, then converting it to a price and adding a margin so the implied probabilities total more than 100%. They open with a sharp estimate, then move the line as bets and new information arrive — balancing risk and following sharp money. The goal is profit through the margin, not predicting winners perfectly.
What is the vig (and what it costs you)?
The vig (or juice) is the bookmaker’s built-in margin, the reason a fair 50/50 market is priced at −110 each side instead of even money. On a standard −110 two-way market, the vig is about 4.5%, meaning you must win roughly 52.4% of bets just to break even. That hidden tax is why beating the closing line matters so much — see our closing line value guide.
| Price (each side) | Implied total | Approx. vig | Break-even win rate |
|---|---|---|---|
| −110 / −110 | ~104.5% | ~4.5% | 52.4% |
| −105 / −105 | ~102.4% | ~2.4% | 51.2% |
| −120 / −120 | ~109% | ~9% | 54.5% |
Why lines move
Lines move for two reasons: money (balancing the book’s liability) and information (injuries, weather, sharp action). When a line moves toward your side after you bet, you likely got value; when it moves against you, the market disagreed. Reading these moves is part of betting like a sharp, which we cover in our sharp vs square guide.
How to beat the book
You beat the book by finding prices where the true probability is better than the vig-inflated line implies — and by shopping for the lowest vig. Convert every price to a probability with our implied probability guide, bet only positive expected value, and track whether you beat the close. The vig means break-even is 52.4%, so discipline is non-negotiable.
Related reading: implied probability · closing line value · sharp vs square betting
Frequently Asked Questions
How do sportsbooks set odds?
They model the true probability of each outcome, convert it to a price, and add a margin (the vig) so implied probabilities total more than 100%. They then move lines based on money and information.
What is the vig in betting?
The vig (or juice) is the bookmaker’s built-in margin. It is why a 50/50 market is priced at −110 each side, costing you about 4.5% and requiring a 52.4% win rate to break even.
Why do betting lines move?
Lines move to balance the book’s liability (money) and to reflect new information like injuries, weather and sharp action. The direction of a move signals whether you got value.
How do I beat the sportsbook?
Find prices where the true probability beats the vig-inflated line, shop for low-vig books, bet only positive expected value, and track whether you beat the closing line.
What win rate do I need to be profitable?
At standard −110 odds, the vig means you need about 52.4% to break even. Lower-vig books reduce that, which is why line shopping matters.
Do AI tools account for the vig?
Good tools remove the vig before comparing their probability to the price, so you see true value. Always check the no-vig fair price, not just the raw odds.
