A market with more than two possible outcomes (e.g., 'Who will win the election?' with 5+ candidates).
A multi-outcome market has three or more mutually exclusive outcomes. Examples: 'Which party wins the presidency?' (Democrat, Republican, Independent) or 'What will GDP growth be?' with multiple ranges.
In a fair multi-outcome market, all contract prices should sum to $1.00. In practice, they often sum to more (overround) or less (creating arb opportunities). When prices sum to more than $1, there's potential to sell all outcomes and lock in profit.
Multi-outcome markets require different analytical tools than two-way markets. De-vigging with the Shin method is particularly relevant for multi-runner markets.
A contract that pays $1 if an event occurs and $0 if it doesn't. The price reflects the market's implied probability.
OverroundThe total implied probability exceeding 100% across all outcomes in a market — the bookmaker's total margin.
De-VigThe process of removing the bookmaker's margin from odds to estimate the true probability of each outcome.