Markets611 words
What −110 both ways really costs
Everyone knows the house takes something. The arithmetic takes four lines, it is on the screen in front of you, and the Commonwealth publishes the figure that tells you whether it worked.
What is in this piece — 7 sections
A point spread is offered at −110 on both sides. That is the default American price, and it is the most-seen number in sports betting. Here is everything it contains, in arithmetic a reader can do on a napkin.
Line one: price to probability
A price of −110 means risking 110 to win 100. The probability that price implies is the stake over the total return: 110 ÷ 210 = 0.5238, or 52.38%.
Line two: add the two sides up
Both sides are offered at −110, so both imply 52.38%. Added together: 104.76%. Probability cannot exceed 100%, and the 4.76% above it is the overround — the margin built into the price.
Line three: overround is not hold
This is the step almost everybody skips. The 4.76% is expressed as a share of a fair book. The operator's theoretical hold is expressed as a share of what was wagered: 0.0476 ÷ 1.0476 = 4.55%. So a perfectly balanced −110 market keeps about four and a half cents of every dollar staked, not four and three-quarter cents, and certainly not the ten cents the “dime line” nickname suggests to people hearing it for the first time.
Line four: theoretical is not actual
4.55% assumes equal money on both sides. Real books are not balanced; they are exposed, and results swing the kept amount above and below the theory, month to month. Which is exactly what the Commonwealth publishes.
Reading the Massachusetts report without being fooled
Sports wagering went live in Massachusetts in two steps — retail on 31 January 2023, online on 10 March 2023 — and the Gaming Commission has published monthly revenue since. Three things to hold onto:
- Handle is not revenue. Handle is the total staked. Taxable gaming revenue is what was kept after winnings were paid. A headline that treats a large handle as a large take has confused line four with line three.
- The tax rates differ by category. Category 1 and Category 2 licensees — the retail operations — are taxed at 15% of gross sports wagering revenue; Category 3, the mobile operators, at 20%. So the same kept dollar is worth a different amount to the Commonwealth depending on which screen it came through.
- Casino revenue sits in the same release. Plainridge Park, MGM Springfield and Encore Boston Harbor report gross gaming revenue alongside the sportsbooks, under their own tax treatment. Adding the two together and calling the result “gambling revenue” produces a number that answers no question.
The Commission's revenue page also carries a running total of taxes and assessments collected since the beginning. If you want the single figure to quote about what this industry has delivered to the Commonwealth, that is where it lives — and it is a cumulative figure, which means it is not comparable to anybody's monthly number.
The check that works on any price
Convert each side to implied probability, add them, subtract 100%, then divide by the total. Do it on a two-way market and you will get something near 4.5%. Do it on a long list of same-game legs and you will see why that market is priced the way it is. The arithmetic does not change; only the size of the answer does.
Which markets are allowed to exist here at all is in the two collegiate bans, and where the settling data must come from is in the official league data rule. Donor material on this desk: the mechanics of bookmakers in the USA and telling the sites apart. Desk index: Markets; full index: the archive.
What we read
Every figure above comes from one of these documents. If a number is not in them, it is not in this piece.