Do Bookies Make A Lot Of Money

A bookmaker or ‘bookie’ as mostly referred in slang, is someone whofacilitates gambling, especially in sports events. Their role largelyconstitutes setting odds, placing bets, and paying out winnings.Their work also includes adjusting the books so that the number ofpeople betting on a win or loss remains even.

Not so long ago, sports gambling had been illegal in most states inthe USA, which sparked illegal bookie operation. It was not uncommonto find some bookies involved in organized crime, although there werestill some who operated independently.

It was, however, not until 2018 when the US Supreme Court ruled infavor of sports betting. The new ruling against the Professional andAmateur Sports Protection Act would open doors to sport betting inthe whole country provided any state agreed to favor it.

How Do Bookmakers Make Money Introduction. A bookmaker is a commercial enterprise that accepts bets on sporting events and novelty markets such as Politics and TV Specials at agreed odds. The range of betting events depends on the country in which the bookmaker is located. Now you understand what is margin and how do bookies make money with a help of this. As I mentioned above, the percentage margin level can vary greatly in different bookies, depending on their greed. For instance, the average margin of Pinnacle is only 2.2%, while Bet-at-home value is 6.5%. Sportingbet also sets about 5.8% margin. Sports betting is big business and bookies make a lot of money out of what they do. If you want to become successful at sports betting it is a good thing to know exactly how the people you are up against (the bookies) actually go about making their money.

The immediate result has been an increased number of bookmakers overthe past couple of years.

There are two integral factors to how bookmakers make their money. The first and most obvious major impact is from coming to the right odds when the bookies decide the probability of an event. Obviously there is the fact that we can win ourselves some money that is our biggest motivation, but also it’s about taking on experts and coming out on top. Bookmaking however is big business and there are not too many occasions on which they get it wrong completely. Bookmakers know what they’re talking about, of course.

Similar to the term ‘The house always wins’, many people have alwaysbeen left wondering why it was so difficult beating the bookies. Thisis because that the bookmakers always end up winning. As we delvedeeper into the subject, let’s start by expounding on some fewconcepts that will better help us understand how bookmakers makemoney.

Balancing the Book

The term ‘bookmaker’ stems from the practice of laying bets, and mostprecisely, recording such bets on a ledger. Hence, the phrase ‘makinga book’.

It is through making a book that the bookie will lay each possibleoutcome of the given events, in such a way that they will beguaranteed profit. That is regardless of the outcome of the event.

Better explained, the bookie achieves this by the setting of appropriate odds in every possible outcome, which allows them to make an amount of money on each final outcome.

Similar to the Punter, the bookie also has no control over theresults of the sporting events. They can, however, control how muchthey rake in or lose in any particular outcome. But how do theyexactly do this?

When it comes to setting odds, bookies set the prices in a way thatreduces variance, ensures profit, and at the same time reflects theactual probability occurring. It is this balance that will ensurethat the punters are still attracted to the bet outcome, and thebookies still make a profit.

Vig, Vigorish/ Overround Concepts

Also known as Juice or edge, this concept revolves around how bookiesstart off by setting their margin, i.e. 5%. The odds they will setafterward on various outcomes will incorporate this commission. As wewill see further down, it is this margin that will allow the bookiesto make money.

To better explain this, we will use the example of a coin toss whichrepresents a 50/50 possible outcome. For every coin flip, there’s a50% chance for tails and another 50% for heads. If a bookmaker wereto follow this assumption and offer true odds for the coin flip, wewould expect them to offer even money. That is a 2.00 in decimal oddand 1/1 in fractional odds. But that is not always the case.

Instead, they always provide an odd less than 2.0, let’s say 1.98 forboth outcomes as it would guarantee a profit to the bookmaker foreither of the result (tail or heads).

If our bookie was offering the true odds on the coin flip, it wouldmean that every successful outcome after $100 stake would result in$200, which is twice e the original stake. But what if the bookie has100 customers all placing $100 bets on the coin flip. 50 betting onthe head result, and the remaining 50 on tails.

If the results was ‘heads’, that would mean that the 50 who wouldhave staked on ‘tails’ would have lost a cumulative of $5000. Butthen, the bookies would use the same money to pay off the ones whohad won. That would be in addition to returning the initial $5000they had staked, bringing the total to $10,000. If you were followingclosely, you will realize that the bookmaker will not have made asingle coin in the entire transaction.

But what about the other scenario where they used lesser odds of 1.98on either outcome. This would mean that for those who won, they wouldget a cumulative $5000 as their initial stake, and an additional$4900 as profit. This is because $5000*1.98 (odd) equates to $9900.The remaining $100 would be the profit the bookmaker makes. That isregardless of whether the punters lose or make a win in their bets.

Hence, the bookies make money by calculating the probability of eachgame and then subtracting the margin. This gives rise to the new odd(1.98 in our case scenario).

Why Do Odds Move/Change in Response to Betting?

When it comes to calculating odds, the bookies arrive at the realprobabilities of an event outcome by using statistics, history form,and sometimes human opinion. The more data there’s, the more likelyit is to reflect on the real probability. On the reverse, if there’sless data on the outcome, the bookmakers become more cautious. Hence,their odds will be lower than the real probability.

However, it is important to note that probability is not always theonly aspect behind odds pricing, bookies are most likely to set oddsbased on how likely they perceive that punters will stake on eachoutcome. This allows them to further balance their books.

A good example is when betting on favorites, let’s say a matchagainst Arsenal and Norwich City. Where Arsenal happens to be thefavorite. Since most people will be staking on Arsenal, the Bookiesmay decide to set a higher margin on Arsenal. This would explain whythere’s always such a big variation on odds against such games. Andeven if you staked on Norwich City, and it actually won, theywouldn’t mind as they would be making money altogether.

Moving on further, most punters wonder why the bookies suspend oddsand markets, and whether they still make money. Yes, suspended oddsare not a rare phenomenon, but it is actually another way thatbookies make money.

Think of it this way, Bookmaking being a private business, it canaffect when and how they offer their odds. So, yes, if a bookiedoesn’t like the way the betting is going and that they’ve beenoverexposed to a particular outcome, they can decide to drop theodds. They often lower the odds dramatically or even suspend themarket in extreme cases. Unfortunately, there’s not much you can doas a punter.

One way to avoid being trapped in such a scenario is staking on yourgames early enough, or being warier of live betting altogether.

How Does Competition Control Prices in Bookmaking?

Although a Bookmaker is a private business, not being the only one inthe market actually favors the gambler in many ways. Otherwise, thepunter would be most advantaged if there’s were only a few bookmakersas they would tend to control the market as they wished. It would bemore of a ‘take it or leave it’ scenario.

For a bookmaker to make money, they need to attract the punters. Thisis not always easy as the market is now flooded with bookmakers allwanting to make a profit too. Today, all a punter needs to do is usea site and run a comparison on the bookmaker offering the best odds.

It is common to see bookmakers try to push their odds, all in anattempt to balance their books. They, however, have to be careful aspushing the odds too much to the extreme discourages the punter fromgambling with them.

Is My Bookie A Scam

Whereas competition might dictate the amount of money the bookie willmake, it sure does serve to make sure that the punter is notexploited by the bookmaker.

Final Thoughts

Do Bookies Make A Lot Of Money Laundering

It is always every gambler’s dream to beat the bookies, but aspreviously discussed it is not as easy as they have almost perfectedthe art of balancing the books. Instead, you should focus more onmaking your wins as the bookies will make money either way.

Always practice researching on which bookmakers are offering the best odds, bet on low edge markets (i.e. Head to Head matches), and don’t hesitate to us multiple betting sites when possible.

Certainly, every gambler has ever thought about how the odds in bookmakers are formed and how do bookies make money.

I’ll try to give my exhaustive answers to these and other questions in my today’s article.

Bookies odds formation

To begin with, let’s figure out what forms the initial bookmaker odds for a particular sporting event. Formation of the odds is based on two main factors – outcome probability and bookmaker’s margin.

The first factor of bookies odds formation is quite simple – each event has more and less likely outcome. The lower is outcome probability, the higher are odds. And vice versa, the more probable is the outcome, the lower are the odds.

Therefore, it’s logical that in matches between an obvious favorite and underdog the low odd will be on the chalk’s winning since the probability of this outcome is extremely high. The outsider’s winning, in its turn, will be evaluated with higher odd as there is less chance to win.

By the way, in the case of an outsider’s success, a bookmaker can hit a good jackpot, since most of bettors will obviously bet on favorite’s winning. However, such sensations are rather rare.

Usually, in large bookmakers, there are always experienced analysts in the team, whose task is to form the bookies odds for a certain event. Of course, only in case that this bookie is not a clone, i.e. it doesn’t use the line of another bookmaker in its work.

What is margin?

Another important factor in the formation of odds is bookmaker’s margin. It’s also the way how do bookies make money. The margin is a certain percentage of its own profit, which was originally placed by bookie on every match/fight/race, etc. Thereby, in spite of the outcome, the bookie wins in any scenario.

By way of illustration what is margin, let’s consider a specific example:

Let’s say we have a match between two absolutely equal teams. Accordingly, their chances to win equal to 50% to 50% (or 0.5 and 0.5). In a good way, the odds for both outcomes should be 2.0 (1/0.5). But bookies are clearly not satisfied with such situation as they need to get their guaranteed income.

That’s why the bookmaker puts margin in the odds, which largely depends on the level of its “appetite”. In our case, let’s take a round number of 10%, to make it clearer how this margin is set.

So, these 10% the bookie will distribute between two outcomes (per 5%), and accordingly, the probability of each of them will be equal to 55% (or 0.55). Now let’s calculate the final odd, which will give us a bookie taking into account margin. It will be equal to: 1/0.55 = 1.82.

Do Bookies Always Make Money

Thus, you can bet on each of the outcomes only @1.82 with absolutely equal chances to win of two rivals. Of course, 10% of margin is too much, but 4-7% can be found among many bookmakers.

Now you understand what is margin and how do bookies make money with a help of this. As I mentioned above, the percentage margin level can vary greatly in different bookies, depending on their greed.

For instance, the average margin of Pinnacle is only 2.2%, while Bet-at-home value is 6.5%. Sportingbet also sets about 5.8% margin.

As for betting exchanges, their system is slightly different. They don’t earn on margin, but on commissions with players’ wins, so the odds there are often quite competitive. Lack of margin makes exchanges attractive for professional gamblers.

Bookmakers’ earnings and arbers

Today we talked about how bookmakers make money. Now, let’s figure out how the earnings of bookmakers and the margin directly affect the arbers.

When betting on opposite outcomes in different bookmakers, we essentially beat them with their own weapons because such bets allow us to bypass the margin. And this means that bookie loses its guaranteed profit. Accordingly, it’s quite logical that bookmakers don’t welcome arbers in the ranks of their customers and try to fight with them in every possible way.

Summary

From this article you understand how do bookies make money and how bookies odds formed. It is important to know for newbies, including arbers. Therefore, I just couldn’t ignore this thread.

In case after reading this article, you still have any questions, leave them in comments and I’d be happy to answer them.