Removing bookmaker margin
Why quoted probabilities add to more than 100%, how a simple no-vig estimate works, and where that shortcut can mislead.
The overround
In a two-sided market, the raw implied probabilities normally add to more than 100%. The excess is commonly called the overround and is one expression of the bookmaker's margin.
Comparing a model probability directly with an unadjusted quote can exaggerate the apparent disagreement between model and market.
A simple proportional adjustment
A basic no-vig estimate divides each side's raw implied probability by the total of both sides. If the raw probabilities sum to 105%, each side is scaled by that total so the adjusted pair sums to 100%.
This is transparent and reproducible, but it assumes the margin is distributed proportionally. Real markets can shade prices asymmetrically, especially with limited liquidity or uneven demand.
Use the market as a benchmark
A cleaned market estimate is a strong baseline and a valuable feature. It is not ground truth and should not silently become the label used to prove the model.
- Store both sides of the market.
- Timestamp every quote.
- Compare the same market definition.
- Report the de-vig method.
Sources
Direct links are preserved so the editorial reasoning can be checked independently.