Las Vegas Sun

November 30, 2009

Currently: 66° | Complete forecast | Log in

Determining house edge

Wednesday, April 20, 2005 | 9:36 a.m.

While a great number of people care about which sports books offer the best World Series futures, relatively few care about the underlying math.

For the record, here is how to determine the theoretical hold percentage -- or "house edge" -- on a set of futures:

1. Go down the list and convert the betting line on each team into a probability of winning expressed in percentage form. For example, if the odds on the Angels are 6-1, the probability of winning would be 1/7 or 14.29 percent. Basically, if the odds pay x to y then the probability of winning is y/(x+y).

2. Add all of the probabilities from step 1. You'll get something like 135.4 percent, for example. Call this total "t."

3. The house edge on the future book is 1-(1/t). Sticking with the example from step 2, 1/t would be 1/135.4 percent, or 1/1.354, or .7385. And 1-.7385 is .2615. So the house edge would be 26 percent.

Source: wizardofodds.com

archive

  • Most Read
  • Discussed
  • Most E-mailed

Complete Listing

Calendar »

  • 30 Mon
  • 1 Tue
  • 2 Wed
  • 3 Thu
  • 4 Fri

All events on Monday »