Betting Overround Explained: What is Overround in Horse Racing Betting?

Betting Overround Explained: What is Overround in Horse Racing Betting?

An often uttered phrase amongst the betting public is that there is 'no such thing as a poor bookmaker'. The bookmaking industry uses certain techniques to ensure profitability and the betting horse racing overround is one example.

'Overround' can be simply defined as the practice of factoring in the profit margin which is implemented by bookmakers when offering betting odds. The overround allows the bookmaker margin to factor into the market and helps make their business model sustainable.

What is Overround in Betting?

In a perfectly 'fair' market, the sum of all implied probabilities for every horse in a race would equal a 100% book. Bookmakers inflate the odds slightly so that the total exceeds 100%. This excess is the overround, creating a bookies margin.

How Bookmakers Use Overround to Guarantee Profit

The overround is used by bookmakers to guarantee a profit in a betting market. A 100% fair book would mean bookmakers are not assured a profit.

In the simplest terms, consider a coin toss. There are just two possible outcomes, heads or tails, with a 50:50, or even money, chance of winning.

Bookmakers, though, may offer not even money, or 1/1, but rather 10/11, on either outcome, thereby factoring in a profit margin of around 5%; a book so weighted is described as '105% overround'.

How to Calculate the Overround in a Horse Race

Here is a step-by-step guide to calculating the overround for a fictional horse race.

We convert the fractional odds for each horse into a percentage (the implied probability). The formula is (1 / (fractional odds + 1)) * 100.

Then you sum the implied probabilities of all horses in the race. The amount by which the total exceeds 100% is the overround.

In this example the total for the book is 116.04%, giving an overround of 16.04%.

Why Does the Overround Matter to Punters?

A higher overround means poorer value for the punter, as the odds are further from the “true” probabilities. Comparing the overround between different bookmakers is a good way to find more competitive odds. Betting exchanges typically have a much lower overround compared to traditional bookmakers. An overround is factored into all sports betting markets, not just horse racing, with traditional bookmakers.

Finding Value in an Overround Market

Despite the bookmaker's margin, it is still possible to find value when you believe a horse's true chance of winning is greater than the implied probability in the odds.

The overround with each bookmaker will be different, as they often take a different position on certain horses in a race, particularly larger field races like the Grand National. Shopping around will often result in punters finding the best value bets, despite the overround tilting things in the bookies favour.