how to Calculate Vigorish on Bookies Odds.

Factual Questions
1

(this is how-to question, that is why I posted in GQ, but I can see merit for it going to Game Room)

I have been looking at the odds for the Masters Golf Tournament, and I wondering if I am calculating the “Vig” correctly.

Ladbrokes, an online and brick/mortar bookie in the UK, Masters Odds .

Current odds for the five favorites

Tiger is 9/2
McIlroy is 6/1
Mickelson is 12/1
Donald is 16/1
Westwood 20/1

and it goes to 5000/1 for Ben Crenshaw.

I calculate the Vig as the sum of the reciprocal of the odds for each player in the field minus 1.



Vig =(∑ ** 1 / (odds)**) - 1

In this case, the sigma part of the formula adds up to be 1.36, which leads me to conclude the VIG is 0.36 or 36%. which seems to be really high. (of course I realize that they are in business to make money)

Is the formula that simple, or am I missing something obvious?

2

A couple of adjustments–first, sum the reciprocals of the odds + 1. In other words Tiger is 4.5 to 1 so sum 1/5.5, not 1/4.5. Your new sigma is 1.275.

Then the vig = (sigma - 1) / sigma, or .275/1.275 = 21.6%.

3

I thought about your first adjustment but never would have thought about dividing it by the sigma.

Thanks