If you bet on horse racing and want to get the best value, it is important to understand the concept of overround. However, when it comes to what is overround in betting, overround is a concept that applies to all sports and markets. The odds a bookmaker offers for a race broadly indicate the chance of winning that each horse has.
But in order to cover their costs and make a profit, bookies make the prices slightly shorter than they “should” be. This creates an overround meaning that in theory the bookmakers can make a profit no matter which horse wins.
Definition: What Is Overround?
What does overround mean in betting, and what is overround in horse racing are basically the same question. The simplest way to understand the overround is to view it as the profit margin for the bookmaker. Oddsmakers try and calculate the chances of each horse winning. However, the odds they offer do not directly reflect these chances.
Instead, the bookmakers publish prices slightly lower than the genuine chances reflect. The overround is, broadly speaking, how much of a margin the bookmaker factors in for themself. Consequently, punters should look for bookmakers that offer a low overround on their horse racing bets. We express the overround as a percentage over 100%. As such, sites with a figure of around 106% or 107% are better than those with an overround more like 115%.
Perfectly “fair” odds deliver a 100% market, or 100% book. This is not something you are ever likely to see. However, occasionally, betting sites may run a 100% book as an offer or promo.
How Overround Works in Practice?
It is perhaps easiest to understand what is overround in betting through the use of an example. Let us imagine a simple three-horse race and the unlikely scenario that each horse is deemed equally likely to win.
In such a race, each horse has a one in three chance of winning. Consequently, the fair odds, without an overround, would be 3.0. This is because odds of 3.0 imply a 33.33% chance of success. Equally, with a coin toss, a 50/50 chance, odds of 2.0 imply a 50% probability of winning. Combining these percentages, in both instances, gives a total of 100%. This would be a fair book.
However, as noted above, no bookmaker would price the runners this way. Instead, each horse might be priced at 2.90. This implies a probability of 34.48%. When we add these percentages together, using non-rounded figures, we get a total of 103.45%. This exceeds 100% and the amount over 100% (i.e. 3.45%) is known as the overround.
Why Bookmakers Use Overround
Bookmakers use an overround for two main reasons. First, they have costs they must pay for. These include staff, marketing, technology, relevant taxes and more. Additionally, like any business, they also want to make a profit. If they offered a 100% book on all races, they would have to rely heavily on luck to win. On average, they would break even but then they would make an overall loss due to their costs.
Second, the overround gives them a margin of error. Calculating the probability of a coin toss is simple, and both outcomes have a 50% chance of occurring. In contrast, predicting the exact probability of any horse winning a given race is impossible. There are simply too many unknowns, and even the savviest experts using all the AI technology in the world cannot predict the future.
The overround, therefore, gives them a little room for manoeuvre should their calculations prove slightly inaccurate. Related to that, it also gives bookmakers some protection if sudden changes occur in the market. Equally, it helps them limit the damage sharp punters and professionals may cause them.
Calculating Overround
Different people use the term overround to mean different things. We will look at this more closely below. However, for the purposes of calculating the overround, we will use the classical definition. This, therefore, is the percentage by which the book exceeds 100%.
You can use an overround calculator to make things simple. However, it is useful for serious punters to understand the basics. As such, the overround is the sum of the implied probabilities, minus 100%. To calculate the implied probability for each horse, you divide 1 by the odds.
Imagine a race with four horses priced as follows:
- Horse 1 – 3.6
- Horse 2 – 8
- Horse 3 – 1.6
- Horse 4 – 34
The implied probability for Horse 1, for example, is 27.78% (1 divided by 3.6 = 0.27777). For the rest of the field, the implied probabilities are 12.50%, 62.50% and 2.94% respectively. If we add those four numbers together we get a total of 105.72%. That figure is the “book” percentage, and if we subtract 100 from that we are left with an overround of 5.72%.
What Is a Good Overround?
A good overround for the bettor is as low as possible! However, as a general rule, less than 10% is reasonable. Less than 6% is very good, whilst an overround of more than 15% makes things very tough.
There are lots of factors that affect the overround, and in general, bigger, more competitive races will have a lower overround. The more money that punters are betting on a contest, the more the different bookies will fight for their business.
Consequently, the odds tend to be a little higher and the overround a little lower. The most obvious exception to this is the Grand National. For a range of reasons, the overround is often exceptionally high, with figures of 25% to 50% not uncommon.
As a general rule, the bigger the field, the higher the overround. Additionally, the lower the calibre of the race, the higher the overround is likely to be. Overrounds in excess of 20% are not especially unusual in these circumstances.
Impact of Overround on Bettors
The impact of the overround on bettors is simple: the bigger it is, the harder it is to succeed in the long term. If the overround is 50% you might still pick the victor and win your bet. But if you always make bets in markets like this, it will be almost impossible to beat the bookies in the long run.
Value betting is key to success and there is less value when the overround is big. A lower overround means that the odds for that race are better in general. Therefore, whichever horse you back, the chances are you are getting better value than if you opted for a bookmaker with a bigger overround.
That is not always the case because the overround might be skewed by very low odds on the favourite. But in general, you should look to bet with a site that offers a low overround.
How to Find Low-Overround Races
There are various tactics you can use to try and find low-overround races. The simplest way is to look at our best horse racing overround betting sites and check out the ones we have highlighted as having strong odds. You can use an overround calculator to manually check the overround on any given race. Comparing the overround across different bookies will help you find the most competitive odds.
However, you should not lose sight of the fact that the most important thing is to get good odds on the horse you want to bet on. To do this, and also to check the overall overround, you can use an odds comparison site.
More generally, as noted above, more prestigious, higher-class races tend to have the lowest overround. Additionally, races with smaller fields generally have a lower overround.
Overround vs. Other Betting Concepts
As alluded to earlier, people sometimes use the term overround interchangeably with the term book. You might see an overround of 130% referred to, but really this is the book value, with the overround actually being 30%. Overround is also a term that many punters use in general terms to mean the profit margin, or just margin.
However, technically, this too is erroneous, as the profit margin is how much money the bookmaker can expect to make based on the overall turnover on the market. Let us look at a very (very!) simple example of a two-horse race.
If both horses are equally fancied to win, they both have a 50% chance. Accordingly, one site might offer odds of 1.8 on both horses. This gives a book of 111.11% and an overround of 11.11%. However, if a bookmaker takes bets of £10 on each horse, they will make £2 profit no matter which horse wins. This £2 profit from a £20 turnover gives a profit margin of 10%, which is slightly different to the overround.
Another similar term, often used interchangeably, is vig, or vigorish. This is more of a US term and is often used in relation to the spread in US sports betting. In simple terms, the cut the bookie takes is sometimes called the juice or house edge.
Conclusion
If you came here asking, “What does overround mean in horse racing?”, we hope we have answered your query. The overround describes the way bookmakers price markets to allow them to make a profit. In the most specific sense, it is the amount over 100% that their odds create in terms of the implied probability of all the runners in a race.
Understanding the concept of the overround can help you make better value horse racing bets. The lower the overround, the greater chance you have of being successful. An overround of less than 10% is generally considered fair. However, 5% to 15% is a reasonable expectation at the best horse racing betting bookmakers.