Sportsbook profitability is derived from structural mechanisms that ensure operator advantage regardless of individual event outcomes. Three fundamental concepts underpin this system.
Point Spread Mechanics
Point spreads create approximately equal probability markets from games with unequal win probabilities.
A team listed at -7.5 is the favorite and carries a 7.5-point handicap. To "cover the spread," this team must win by 8 or more points.
A team listed at +7.5 is the underdog and receives a 7.5-point advantage. This team covers the spread by either winning outright or losing by 7 or fewer points.
The spread is not a prediction of margin of victory. It is a price-setting mechanism designed to generate approximately equal betting interest on both sides of the market.
Moneyline betting removes the point spread structure and settles based on outright winner, with odds adjusted to reflect win probability differential.
Total (Over/Under) Markets
Total markets price the combined score of both teams in a game. The bettor selects whether the actual combined score will exceed or fall short of the posted number.
For a Lakers vs. Celtics game with a total of 225.5 points:
- Over bets win if the combined score is 226 or higher
- Under bets win if the combined score is 225 or lower
This market structure allows betting on scoring volume independent of game outcome.
Vig Structure
Vig (also called juice or margin) is the commission structure that guarantees sportsbook profitability under balanced action scenarios.
Standard point spread pricing is -110 on both sides. This requires $110 risk to win $100.
Profit Mechanism
With balanced action:
- Sportsbook collects $220 ($110 from each side)
- Winning side receives $210 ($110 stake + $100 profit)
- Sportsbook retains $10 regardless of outcome
This 4.55% margin compounds across all settled wagers.
The break-even win rate at -110 pricing is 52.38%. A 50% win rate generates negative returns due to vig extraction.
Break-Even Requirements
| Odds | Risk to Win | Break-Even Win % | Profit on $100 |
|---|---|---|---|
| -105 | $105 to win $100 | 51.22% | $95.24 |
| -110 | $110 to win $100 | 52.38% | $90.91 |
| -115 | $115 to win $100 | 53.49% | $86.96 |
| -120 | $120 to win $100 | 54.55% | $83.33 |
Vig magnitude directly determines the win rate threshold for profitability. Line shopping across multiple operators to obtain optimal pricing can reduce this threshold materially.
Vig Impact on Returns
| Win Rate | At -110 Odds | At -105 Odds | Differential |
|---|---|---|---|
| 50% | -$4.76 per $100 | -$2.38 per $100 | 50% improvement |
| 52% | -$0.95 per $100 | +$1.43 per $100 | Positive vs negative |
| 54% | +$2.86 per $100 | +$5.24 per $100 | 83% increase |
Summary
Sportsbook profitability is systematically ensured through vig applied to both sides of two-way markets. The operator's objective is not to predict outcomes but to balance action and extract the embedded commission.
Profitable betting requires win rates exceeding the break-even threshold imposed by vig. At standard -110 pricing, this threshold is 52.38%. Identifying bets with true win probabilities exceeding this requirement is the fundamental challenge of systematic betting strategy.