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This guide is for horse racing bettors who want to understand how bookmakers structure their markets and where the house edge comes from in fixed-odds betting.
Overround only applies to fixed-odds betting, which is common in UK, Ireland, Australia, and some other jurisdictions. It doesn't apply to pari-mutuel betting used in the US and elsewhere, which has a different structure called takeout that works differently. If you're betting pari-mutuel pools, the concepts here won't directly apply but the principle is similar - the operator takes a cut before paying winners.
The basic idea is simple. In a fair market with no house edge, the probabilities of all possible outcomes add up to exactly 100%. Three horses with equal chances would each be priced at 2-1 (33.33% implied probability each). But bookmakers price them at something like 6-4, 6-4, 6-4 instead, which implies 40% probability each. Three times 40% equals 120%. That extra 20% is the overround - the bookmaker's profit margin built into the prices.
Calculating Overround From Odds
Converting odds to implied probability is straightforward math. Take fractional odds like 3-1. The formula is: denominator divided by (denominator plus numerator), then multiply by 100 for percentage.3-1 odds: 1 / (3 + 1) = 1/4 = 0.25 = 25% implied probability.
5-2 odds: 2 / (5 + 2) = 2/7 = 0.286 = 28.6% implied probability.
Even money (1-1): 1 / (1 + 1) = 1/2 = 0.50 = 50% implied probability.
For decimal odds it's even simpler. Just divide 100 by the decimal odds.
4.00 decimal: 100 / 4.00 = 25% implied probability.
2.50 decimal: 100 / 2.50 = 40% implied probability.
1.50 decimal: 100 / 1.50 = 66.67% implied probability.
Once you've converted all horses' odds to implied probabilities, add them up. If they total more than 100%, the difference is the overround.
Example race with five horses:
- Horse A: 2-1 (33.3%)
- Horse B: 3-1 (25%)
- Horse C: 4-1 (20%)
- Horse D: 8-1 (11.1%)
- Horse E: 10-1 (9.1%)
Total: 33.3 + 25 + 20 + 11.1 + 9.1 = 98.5%
Wait, that's under 100%. That would mean the bookmaker is operating at a loss, which doesn't happen. Let me recalculate because those odds are too generous.
More realistic prices:
- Horse A: 6-4 (40%)
- Horse B: 5-2 (28.6%)
- Horse C: 4-1 (20%)
- Horse D: 6-1 (14.3%)
- Horse E: 8-1 (11.1%)
Total: 40 + 28.6 + 20 + 14.3 + 11.1 = 114%
The overround is 14%. The bookmaker has priced the market so probabilities add up to 114% instead of 100%, giving them a 14% edge built into the prices.
What Overround Percentages Mean In Practice
Overround varies by bookmaker, race quality, and competitive pressure. Typical ranges:**110-115%**: Competitive markets on major races where multiple bookmakers compete for business. The overround is relatively low because bookmakers need attractive prices to draw customers. Big races at Cheltenham, Royal Ascot, major group races - these usually have overrounds around 110-113%.
**115-120%**: Standard markets on regular race days. Most everyday racing falls here. The bookmaker isn't under massive competitive pressure so they can maintain a comfortable margin.
**120-125%**: Smaller races, less popular tracks, or races where the bookmaker doesn't expect much betting volume. Higher overround compensates for lower turnover and higher risk of being vulnerable to informed bettors.
**125%+**: Novelty markets, ante-post betting far in advance, or very small races. Extremely high overround because the bookmaker is exposed to risk without the volume to balance it out.
The overround directly reduces your expected return. In a market with 115% overround, you need to be 15% better than random selection just to break even. If you bet randomly across many races, you'll lose 15% of everything you wager over time because that's the built-in house edge.
Lower overround markets give you better value on the same predictions. A horse that's a genuine 25% chance to win might be priced at 3-1 (25% implied) in a 110% overround market but only 5-2 (28.6% implied) in a 120% overround market. The first price is fair, the second is overpriced. Shop around for better overrounds when possible.
How Bookmakers Set Overround
Bookmakers start with their assessment of true probabilities based on handicapping analysis, then add overround by shortening all the odds proportionally. A horse that's genuinely 25% to win might get priced at 5-2 (28.6%) instead of 3-1 (25%). The bookmaker has added roughly 3.6 percentage points of overround to that horse's price.The overround doesn't get distributed evenly across all horses though. Bookmakers typically put more overround on favorites and less on longshots because that's where casual money flows. Recreational bettors pound favorites without comparing prices, so bookmakers can afford to give worse value there. Longshots need to be priced more attractively to get any action at all.
In a typical race, the favorite might have 5-6 percentage points of overround loaded into its price, while the longest shots only have 1-2 percentage points. This is why shopping for best odds matters more on favorites than longshots - the price variation is larger.
Example:
True probabilities: Favorite 40%, Horse B 30%, Horse C 20%, Horse D 10%
Fair odds: Favorite 6-4 (40%), Horse B 9-4 (30.8%), Horse C 4-1 (20%), Horse D 9-1 (10%)
Bookmaker adds 15% overround, distributed unevenly:
- Favorite: 45.5% (10-11 odds) - added 5.5 points
- Horse B: 34.5% (8-5 odds) - added 4.5 points
- Horse C: 23% (10-3 odds) - added 3 points
- Horse D: 12% (13-2 odds) - added 2 points
Total overround: 45.5 + 34.5 + 23 + 12 = 115%
The favorite absorbs most of the overround because that's where the public bets heaviest. Horse D only gets a small amount because the bookmaker needs to offer reasonable longshot prices to stay competitive.
This creates opportunities. If you're primarily betting favorites, you're fighting the highest overround and you need exceptional handicapping to overcome it. If you're betting selections across the odds spectrum, you face varying levels of overround. Understanding this helps you identify where value is most likely to exist.
Overround Versus Takeout - Key Differences
Overround and takeout serve the same purpose - giving the operator a profit margin - but they work differently in structure and impact.**Overround (fixed odds)**:
- Built into the prices before you bet
- You know exactly what you're getting when you place the bet
- Different bookmakers have different overrounds on the same race
- You can shop for better prices
- The house edge is transparent in the odds
**Takeout (pari-mutuel)**:
- Removed from the pool after all betting is complete
- You don't know your exact payout until betting closes
- All bettors at the same track/pool face the same takeout
- No shopping for better prices in the same pool
- The house edge is separated from the odds themselves
With overround, you're betting against the bookmaker's prices. With takeout, you're betting into a pool against other bettors after the operator takes their cut.
Overround markets let skilled bettors find value by shopping for the best prices across multiple bookmakers. Takeout markets don't offer that option - you're in the same pool as everyone else. But takeout markets can offer better value if you're betting horses the public underrates, because your payout depends on what others bet, not on a bookmaker's posted price.
Most sophisticated bettors prefer one system over the other based on their edge. If you're good at finding overlooked horses that the public undervalues, pari-mutuel can be better because you're betting into inefficient public opinion. If you're good at line shopping and finding bookmakers who misprice horses, fixed odds can be better because you can exploit bookmaker errors.
Which System Is Better For Bettors
Depends on your skills and what you're betting.Fixed odds with overround is better when:
- You want certainty about your payout before the race
- You can shop multiple bookmakers for best prices
- You're betting horses the public also likes (the pari-mutuel pool would give you worse odds)
- You're betting small amounts where pari-mutuel pools might not have good liquidity
Pari-mutuel with takeout is better when:
- You're betting horses the public dislikes or underrates
- You want to bet large amounts without moving the market (fixed odds bookmakers limit winners)
- The takeout percentage is lower than the typical overround you face
- You're comfortable with odds fluctuating until post time
Neither system is inherently better. Both have a house edge. The question is which structure lets you find and exploit value more effectively given your approach. Some bettors split their action, using fixed odds for favorites they like and pari-mutuel for longshots the public undervalues.
Finding The Best Overround Markets
Not all bookmakers offer the same overround on the same race. Shopping around matters more than most bettors realize.Major online bookmakers publish their overrounds indirectly through their odds. You can calculate the overround yourself by converting all horses' odds to percentages and adding them up. Do this across three or four bookmakers for the same race and you'll see variation. One might be 114% overround, another 118%, another 112%.
The bookmaker with 112% overround is giving you better value on every selection in that race. It doesn't mean you'll win, but over hundreds of bets the lower overround compounds into significantly better returns if your handicapping is sound.
Betting exchanges operate differently. They match bettors against each other rather than setting odds, and they charge commission on winnings (typically 2-5%) instead of building overround into prices. The effective overround on exchanges is often lower than traditional bookmakers because you're betting at prices set by market supply and demand rather than bookmaker margins.
The catch with exchanges is liquidity. Major races have deep liquidity and you can bet big amounts at good prices. Smaller races might have thin liquidity where the available odds aren't actually better than bookmakers once you account for limited volume. Check liquidity before assuming exchanges are always better value.
Price comparison sites show odds from multiple bookmakers simultaneously, making it easy to find the best price on your selection. These sites are useful but they don't always show every bookmaker, and some bookmakers pay for premium placement. Use them as a starting point but verify the odds directly on the bookmaker's site before betting.
Best odds guaranteed promotions reduce the impact of overround. Some bookmakers offer BOG on UK and Irish racing, which means if you bet at morning odds and the SP (starting price at post time) is better, you get paid at the better price. This effectively gives you free optionality and reduces your exposure to overround since you can bet early without worrying about the horse drifting to longer odds.
How Overround Changes Throughout The Betting Cycle
Bookmakers adjust overround dynamically based on betting patterns and risk management. Understanding how overround evolves helps you time your bets better.**Early markets (days before the race)**: Highest overround, often 120-125% or more. The bookmaker is exposed to risk from informed money and needs higher margins to compensate. Prices are less efficient because there's limited information flow and the bookmaker is vulnerable to people who know things they don't.
**Day-of-race markets (hours before post)**: Overround drops to 115-120% as more information becomes available and the bookmaker has seen initial betting patterns. They're more confident in their pricing and can afford to tighten margins slightly.
**Close to post time**: Overround tightens further to 110-115% on major races because competition between bookmakers intensifies. Everyone wants the closing action and they need attractive prices. Less competitive races might stay at 115-118%.
**In-running markets (betting during the race)**: Overround often widens again to 120-130% because the bookmaker is taking on more risk with rapidly changing race dynamics. They need higher margins to protect against people watching the race live and spotting advantages before the odds update.
The pattern creates strategic opportunities. If you have a strong opinion about a horse's chances days before the race, you might take early odds despite higher overround if you expect the horse to shorten significantly. If you're less certain, waiting until closer to post time gets you better overround but you risk your price shortening.
Some bettors play both angles. They bet horses early if they think they're getting value even with high overround, then bet more closer to post if the price holds or drifts. Others wait until the last moment to get the tightest overround possible. There's no single correct approach - it depends on your confidence level and risk tolerance.
Overround And Market Efficiency
Markets with lower overround tend to be more efficient because the tighter margins force bookmakers to price more accurately. When overround is 110%, the bookmaker can't hide mistakes behind fat margins. When overround is 125%, they have cushion to be wrong and still profit.This creates a paradox. Lower overround markets are better value in that you're paying less in built-in house edge. But they're also harder to beat because the prices are more accurate. Higher overround markets are worse value but potentially easier to find mispricings because the bookmaker isn't pricing as tightly.
For recreational bettors just betting for fun, lower overround is always better. You'll lose more slowly. For serious handicappers trying to profit, sometimes higher overround markets on smaller races offer more exploitable mispricings than major races with 110% overround where the market has already incorporated all available information.
The sharpest bettors focus on big races with low overround but only bet when they have genuine edges. They're not betting every race - they're waiting for spots where their handicapping identifies something the market missed despite the efficient pricing. That's hard work but it's the only way to beat low overround markets consistently.
Comparing Overround Across Different Bet Types
Bookmakers apply different overrounds to different bet types on the same race. Win betting usually has the lowest overround. Place betting, each-way betting, and exotic bets typically have higher overrounds because the bookmaker faces different risk exposures.**Win betting**: 110-120% depending on race quality and bookmaker. This is the baseline.
**Place betting**: 115-125%. Higher than win betting because fewer horses finish in the places and the bookmaker is covering multiple outcomes. The extra overround compensates for paying out multiple horses per race.
**Each-way betting**: Combines win and place bets, so the total overround is weighted between the two. If you bet £10 each-way (£20 total), you're paying the win overround on the win portion and the place overround on the place portion. The combined edge against you is higher than just win betting.
**Forecast/Tricast**: Significantly higher overround, often 130-140% or more. These exotic bets where you predict first two or first three finishers are harder to price accurately and bookmakers protect themselves with larger margins. The payouts look attractive but the overround is brutal.
**Match bets (head-to-head)**: Two horses in the same race, which finishes higher? Overround here is typically 108-112%, lower than win betting because the bookmaker is pricing a binary outcome and facing less complexity. These can offer value when you have strong opinions about specific matchups.
The general rule is simpler bets have lower overround and complex bets have higher overround. Bookmakers charge more for exotic bets because they're harder to price and because casual bettors are drawn to big payouts without calculating the house edge.
If you're trying to beat horse racing betting long-term, focus on win betting and simple exotics where the overround is lowest. The fancy bets might hit occasionally and pay well, but over time the higher overround grinds your bankroll down.
Using Overround To Evaluate Bookmaker Value
Once you understand overround, you can use it as a tool to evaluate whether you're getting value from a bookmaker or being ripped off.Calculate the overround on several races from the same bookmaker. If they're consistently running 120%+ overround on ordinary races, they're not competitive and you should find better options. If they're running 110-115% on major races, they're in line with market standards.
Compare overround across bookmakers for the same race. Whichever bookmaker has the lowest overround is offering the best value on that specific race. This might vary race to race - Bookmaker A might be best on race 3 while Bookmaker B is best on race 5. Optimal betting means using multiple bookmakers and always taking the best available price.
Track your average overround faced over time. If you're consistently betting markets with 118%+ overround, you're making it harder on yourself than necessary. Aim to get your average overround faced down to 113-115% through better bookmaker selection and price shopping.
Overround also helps you identify when a bookmaker is offering promotions that genuinely provide value versus promotions that look good but aren't. A "boosted odds" offer that takes a horse from 3-1 to 7-2 sounds great until you calculate that the race still has 117% overround including the boost. They've given you slightly better odds but haven't actually reduced their edge meaningfully.
FAQ
Is it possible to find races with no overround or even negative overround?Extremely rare in fixed-odds markets. Bookmakers are running businesses and they need profit margins. You might occasionally see a race where promotional offers or competitive pressure drives the total odds close to 100%, but it won't stay there long. Betting exchanges sometimes have races that approach 100% implied probability total after accounting for commission, but once commission is factored in you're still fighting a house edge. Negative overround (where probabilities sum to under 100% in your favor) basically doesn't exist outside of severe bookmaker errors that get corrected quickly.
Does overround affect exotic bets like exactas differently than win bets?
Yes, exotic bets typically have much higher overround because they're harder to price and bookmakers need bigger margins to protect against risk. Where a win market might be 112% overround, a forecast or tricast on the same race might be 135-140%. This makes exotic bets worse value in general unless you have genuinely strong edges in predicting combinations. The bigger payouts attract casual bettors who don't calculate the house edge properly. If you're serious about profit, spend most of your time on win betting where the overround is lowest.
Can I calculate my expected loss just from knowing the overround?
Roughly, yes. If you're betting randomly in markets with 115% overround, you'll lose approximately 15% of everything you wager over time. That's not exact because the overround isn't distributed evenly across all horses, but it's close enough for practical purposes. If you're betting with actual handicapping skill, you might overcome the overround and profit. But if you're betting without edge, the overround tells you how fast you'll lose. Lower overround means slower losses, higher overround means faster losses.
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