overround

To reflect the combined probabilities of the various outcomes in an event, the odds for each outcome when converted to a percentage should total 100%. For example, if the event was the toss of a coin, the probability of a head or a tail is 50%; the probability of either a head or a tail being tossed is 100%. To reflect the probabilities in this event, the odds offered when laying either heads or tails should be 2.0. When these odds are converted to a percentage and added together the total is 100% (100/2.0 + 100/2.0 = 100). This is known as a “round” book. By adjusting the odds so that the total exceeds 100%, it is possible to build a profit margin into the prices offered, which, assuming an equal number of layers for either outcome, guarantees a profit not matter what the outcome. The amount by which the prices exceed 100% is called the overround. For example, if heads or tails was layed at 1.9 rather than 2.0, the book overround would be 5% (100/1.9 + 100/1.9 = 105). Assuming both heads and tails are each backed with a stake of £10, £1 is guaranteed (£20 taken with a total payout of £19).