Saturday, 25 July 2020

Overround / Over-round

The editor of this blog likes to eschew obfuscation and espouse elucidation, and a couple of issues about "over-round" have been annoying me.

First of all, should the word be "overround" or "over-round"?  Search the web, and both spellings can be found.

Not the biggest of concerns, but without the hyphen, Blogger underlines it in red although MS Word has no problem with it. Since I have an aversion to anything red, my preference is to use "over-round". 

But the bigger issue is how to use the term accurately. 

I have seen some sources refer to an over-round of, say 103%, while other sources use 3% or 1.03. 

Logically, using the 3% / 103% as an example, the bookmakers' round is 103%, while the OVER-round is the 3%, since a 100% round would be a fair book.

My bible for all, or at least many, things betting related is Leighton Vaughan Williams' Information Efficiency in Financial and Betting Markets and here the spelling is "over-round" but the use is:

Over-round = 1.03
Dominic Cortis' 2015 study Expected Values and Variances in Bookmaker Payouts : A Theoretical Approach Towards Setting Limits on Odds published in The Journal of Prediction Markets uses "over-round" as an alternative to "bookmaker margin" or "vig". 
... adds up to more than 100%, and the difference to 100% is generally described as the bookmaker margin (Cain, Law, & Peel, 2003; Peel & Thomas, 1992; Štrumbelj, 2014). Other similar terms include the over-round (Zafiris, 2014) and the vig (Peel & Thomas, 1992). The sum of the inverse of probabilities are equal to 1.05121%. The bookmaker margin in this case is 5.121%.
The Mathematics of bookmaking page in Wikipedia doesn't hyphenate the word but does say that it is the "amount by which the actual book exceeds 100%, e.g. 3%:
The amount by which the actual 'book' exceeds 100% is known as the 'overround', 'bookmaker margin' or the 'vigorish' or 'vig'.
Unfortunately, this article then contradicts itself by saying:
which gives an overround of 107.36%.
Incidentally, further definitions of vigorish include juice, under-juice, the cut, the take, the margin or the house edge!

I reached out to the esteemed Joseph Buchdahl for his opinion on the matter but he must have weightier issues going on right now as he rather dismissively replied:
Well, no, it really doesn't matter that much so long as every one understands the meaning intended.

Regarding ROI, I had no idea there was a similar problem with it, as I have always used it as defined financially:
Betting Wolf explained that:
Problem with ROI is the same issue essentially... some people quoting 103% meaning 3% profit. Where as some would say 103% as in £100 spent and £203 returned.
Claiming an ROI of 103% in the above example would be rather misleading. I find it bad enough that some people don't include the stakes on their voided or pushed bets, but that's another story. 

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