This term refers to odds of a particular wager which are higher than they should be, and tend to favor the player rather than the house.
An overlay will rarely, if ever, be found at a Las Vegas sportsbook, but may sometimes be found at a local betting parlor or from a local bookie. An overlay occurs when not enough research has been done by the bookmaker. In some rare cases, a line may appear as an overlay to attract more attention to one side of the line. This may occur in cases where the other side is already overloaded with wagers, or the contest as a whole has not been attracting enough action. Whenever a professional gambler finds an overlay, they usually bet huge sums of money. This is why many linemakers use the lines published by others to make their own lines. It ensures an overlay will not get published, and if it does, it does not stay open for long.