De-vigging means rescaling the implied probabilities of a market so they sum to exactly 100 percent. The result is a fair probability: what the market thinks, with the book's margin removed.
Proportional normalisation
The simplest method, and the one used in the VigPulse tools, is proportional: convert each price to an implied probability, add them up, then divide each one by that total. Each outcome keeps its share of the whole.
- Convert every price in the market to implied probability.
- Sum them. The sum will exceed 1 (that surplus is the overround).
- Divide each implied probability by the sum.
- The results now add to exactly 1 and are your fair probabilities.
Worked through -110 on both sides: each implies 52.38 percent, the sum is 104.76 percent, and 52.38 divided by 104.76 is 50 percent per side. That matches intuition, which is a good sign the method is not doing anything exotic.
Where proportional de-vigging is weakest
Proportional normalisation assumes the book spreads its margin evenly across outcomes. Real books usually load more margin onto longshots, so on a heavy favourite or a big underdog this method tends to overstate the longshot's fair probability. Alternative approaches such as the power or shin methods try to correct for that.
Note
VigPulse uses proportional de-vigging in its public tools because it is transparent and easy to check by hand. On lopsided prices, treat the output as an approximation.
One market de-vigged in isolation is still only one book's opinion. Combining several books into a consensus is a separate step, and it is where most of the real work sits.