Several things pop up when learning how to start an online sportsbook. Among other things, one of the most common questions is “how do bookies make money?” The answer is simple or a little complex, depending on the size of the bookie.
For example, a bookie hopes the Rams will win to keep wagered money if someone is making a bet on Cincinnati Bengals against the Los Angeles Rams. But, if a bookie takes more stakes on both sides, he would have to charge a commission. Why?
Suppose an equal number of people wagered on teams A and B. The money from the losing side will cover winnings for the winning side, leaving the bookie with no income. Therefore, a bookie must find a way to make a profit regardless of which side wins.
The answer to how do bookies make money also lies in the bookmakers software. A bookie can make incredible profits with the right software, such as Power Pay Per Head. Let’s look at an in-depth look at the question, giving examples showing the amount of money a bookie is likely to make in different instances.
1. Charging A Vigorish
Charging a vigorish or juice is the primary way for bookies to make money. Usually, a player picks odds, already incorporated with a vig. Then, the bookie keeps the vig for all the wagered money when the bettor loses.
Here is an example of against point spread bet:
- Cincinnati Bengals +4.5
- Los Angeles Rams -4.5
Let’s assume a bookie is charging 10 percent juice. From the odds above, a player wagering on the Rams can win the bet if the Rams win the game by over 5 points.
Suppose a player wants to wager on the Bengals. The team has to lose by 4 points or less for the bettors to cash in.
Suppose a player has wagered $100 on the Bengals which loses by 3 points. The bookie will subtract his 10 percent fee from the wager, $10 of $100.
Considering that Cincinnati has lost, the player has to pocket $90 plus his profit of $100. A bookie can use the money wagered by the losing player to pay his winner. However, the money comes from the bookie’s pocket if he has no money from lost bets.
1. How To Set A Vigorish
To understand how bookies make money by charging a vig, you need to know how to set one. It starts with the bookie deciding a margin for a specific sport or event. Usually, this can range between 3 percent and 10 percent.
With ideas like “ I want to be a bookie” crossing your mind, you also have to think about how to earn. As one way for bookies to make money, you must know the process of setting a juice.
First, you must understand that bookmaking is like any other business, and your customers are bettors. You have to sell your betting service or product more than you think it is worth to earn the buying price and make a profit.
Usually, a bookie has no idea which team will win a match. So, if he were to set the actual odds, it would be a 50/50 percent outcome. In this case, the odds would look like 2.00 in decimal, 1/1 in fraction, and +100 in the money line.
A $10 winning wager would return as $20, which includes the initial wager plus profit. Suppose the bookie has 50 players wagering on one side and another 50 on the other.
The money on the losing side would pay the winning side leaving the bookie with zero profit. Therefore, the bookie has to adjust the odds to guarantee a profit. So, instead of offering 2.00, he can offer 1.9.
If a player wagered with the new odds and wins, he would get $10 (original stake) plus 9.09 in profit. Meanwhile, the bookie will make almost a dollar from the bet.
An odds compiler can arrive at specific odds by analyzing different factors. This includes using human opinion, statistics, and historical forms. If an oddsmaker has more data to rely on while creating lines, you can expect odds to reflect an actual probability.
If not, a bookie offers much lower odds to protect his bank. Ideally, a bookie has to offer unfair odds putting bettors at a theoretical disadvantage when he places a bet.
Setting a vigorish is not the only way bookies make money. This brings us to the second method of how do bookies make money.
Balancing The Books
Setting a vigorish is not enough for a bookie to make money. You need to balance the books too to ensure profits and prevent losses. Suppose 30 players have wagered on one side while another 20 on the other.
If each player wagered the same amount, it would leave the bookie with unbalanced books. Suppose the side with more bettors won. The money from the losing side would not be enough to cover the winning side.
A bookie would have to use his bankroll to pay the balance. But, you can avoid this by balancing your books.
Balancing the books has several advantages. For example, you ensure equal or almost equal amounts of profit no matter which side wins.
Suppose $5000 has been wagered on team A and $5000 on team B. Considering different odds, you will likely lose money when a specific team wins the game.
For example, if $5000 is wagered at 1.59 and another $5000 at 2.38, a bookie loses money when team B wins the game. How?
Here a bookie collects $10,000. He will pay $5000*1.59 if the first team wins, equaling $7,950. This leaves the bookie with $2,050 in profit.
Suppose team B won the game. A bookie would pay $5,000*2.38, equaling $11,900 in payouts. In other words, a bookie would use his money to cover a $1,900 difference, which is a loss on his side.
Adjusting The Odds To Balance The Books
You must have seen the odds on sports fluctuate. It is usually a result of balancing the books. If more money is going to one side over the other, a bookie has to encourage or discourage betting on either side.
For example, a bookie can increase 1.59 odds to 1.73 or lower 2.38 to 1.65. This will encourage players to wager more on the increased odds and discourage betting on the lowered odds. The bookie will continue fluctuating the odds until he achieves a balanced book.
Yet, it is not definite that players will take the bait. If a team is clearly the favorite, bettors will keep wagering on it no matter how much bookies adjust the odds. In this case, a bookie can freeze betting on one side and leave the other side open.
If that does not work, bookies can use a layoff account to minimize the risk. Alternatively, they can delete the betting line and refund wagered money.
3. Novice Bettors
How many professional bettors do you know? You probably know none or a few. The rest are novice bettors.
They log in to their accounts, pick their favorite teams, wager and log out. Novice bettors do not rely on any data to place their bets. Often, they lose their money by basing their chances on emotions instead of analyzing the probability of a team winning.
While this is bad for them, it is good for you. In fact, you should strive towards recruiting more novice bettors to grow your profits. However, you cannot solely rely on this tip if you want to make good profits.
4. Using The Right Bookmakers Software
Another way to answer “how do bookies make money” is by using the right software. Here are several examples showing how bookmakers software makes a difference.
Suppose you bought bookie software from a developer and cut ties. You will spend more money on the service if you ever need to update the software or remove bugs.
Your software will soon become outdated, forcing you to buy another or stick with the old version. Meanwhile, your services become substandard, and you lose clients for not providing a great sports betting experience.
Suppose you have a pay per head sportsbook software. The payment plan is $10 per player each week. So, players must wager and their tickets are graded for your price per head provider to charge a fee.
Unlike the first instance, you can make money.
Usually, your pay per head provider will offer products and services enticing your players to wager. Moreover, you can only pay for the service after players have wagered, unlike in the first instance, which can leave you broke for paying for the software before you know players will wager.
How Do Bookies Make Money: Step-By-Step Guide On How To Start Making Money
Now that you know how bookies make money, it is time to jump into it. Before you give up on your dreams because you are not an odds compiler, hear us out.
Most bookies are making money without odds compiling skills. Most still do not know how the odds are set because they rely on the expertise of pay per head providers. However, learning about creating odds would not hurt, especially if you want to increase your monthly income.
Below, we look at the steps you can take to start earning money as a bookie, whether you know how to compile odds or not. Each of these steps is crucial as it determines how much you can make.
1. Setting Up A Sportsbook Website
The first step is to open a sportsbook website. If you do not know how to open a sportsbook, worry not. In fact, you do not have to do it yourself, but it is important to learn the basics.
You must design a website where players can log in and place their bets. This is a better solution than taking calls from your players to places on their behalf. A website lets clients log in anytime, deposit funds, and place their wagers.
There are different ways of designing a website. You can create one yourself if you have the skills or hire an expert. This will cost a lot of money and time.
The other option is to sign up with a pay-per-head site. It is cheaper and more convenient.
PPH sites have ready betting templates that you can customize to your liking. You can also ask the provider to add several customizations or develop a new website for a fee.
Setting up your website is a crucial stage of how to start an online sportsbook. You have to consider your clients and how you want them to view your business. You want to show your clients that you are a professional bookie they can rely on.
Choose the right images, graphics, fonts, colors, and other things that show your authority in the betting industry. The interface must be user-friendly.
Remember to add crucial features, too, like a bet slip. Add payment methods, including cryptocurrencies and traditional options.
You may not need to complete other tasks while working with a pay per head shop. Instead, you can pay an agreed fee for the provider to offer bookmaking tools, customer support for your clients, troubleshooting, backup of your data, and update security features.
Your pay per head shop is also your software provider. Considering that software plays a part in how much you make, you must consider several factors when choosing your partner. Here is a checklist:
- Company’s reputation and success rate
- Sportsbook software features
- Numerous betting markets
- Security measures in place
- Bookie agent support
- Device compatibility
2. Choose Sports Betting Markets To Offer
Why is the idea of “ I want to be a bookie” crossing your mind? It is essential to realize why you want to venture into the industry. For example, most bookies go into sports betting because they love sports.
In that case, they choose the sports they love to offer wagers. This is a good approach because you will enjoy running your business. However, consider your clients’ needs too.
Your audience plays a great part in creating a sports betting market catalog. For example, if your target is American players, your menu should have football, basketball, tennis, hockey, and hockey.
Another thing to help determine sports to offer bets on is sports seasons. For example, you cannot decide to provide golf bets when there is no one playing golf anywhere in the country. You can find an upcoming sport and focus on marketing it to attract bettors to wager once the season is up.
You have the right to start with one sport and expand your menu as your business grows. While you can trust your pay per player provider to run your sportsbook, you need to consider your bankroll before expanding your business.
3. Managing Your Business
The survival of your business depends on how you manage it. Some companies have launched with millions in their banks only to fall following management issues. But, you can start with a few dollars and grow your business’s bank balance to millions when you use the right managerial strategies.
Some bookies ignore their part after partnering with price per head service providers. They forget that clients are their primary responsibility. Remember, your PPH provider has no direct contact with your clients except when providing solutions during customer service.
Also, you have complete control over your business operations. How do you manage your sportsbook?
There are several things you can do, including:
- Setting the minimum and maximum odds
- Determining which events players can wager on
- Listen to your clients and act on their needs
- Revamp your services to keep your players interested
- Recruit new players consistently
- Monitor your bankroll and add money to it
- Adjust your vig from time to time
- Market your sportsbook
Each of these will contribute differently to your income. For example, when you recruit more players, you create a bigger player base, increasing your overall vig.
When you market your betting services, people become aware of your services. Some will seek your services or refer their friends to your site.
Suppose you have predetermined the minimum and maximum odds. Even when odds compilers adjust the lines, the odds will be within your range.
Start Making Money Today
We just gave answers to “ how do bookies make money” and steps to take to ensure an income. The only question without an answer is whether you want to make money and when you think you can start.
With a guide on “how to open a sportsbook” and this article on how bookies make money, you have all the resources you need to launch and earn a living. You also need the right bookmakers software.
Fortunately, Power Pay Per Head is one call away. You can even fill in the contact form on the homepage.
The site will set up a betting platform in a few minutes. Then, you can create players’ profiles and take wagers.
The site will give you several free weeks of using its services. This will help you realize how much you can make and how much value you can get from the company’s service. Call Power Pay Per Head at 855-492-6007 to get started.
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— Power Pay Per Head (@powerpph) September 2, 2022