Here you are after deciding to become a bookie. You have learned how to become a bookie, have all the resources you need, and are ready to take betting action. Yet, one question seems not to leave your mind. How do bookies make money?
If you were in the sales industry, you know you need to sell to make money. The sports betting industry is a little complicated, especially with all the misconceptions that bookies make money from losing bettors.
The misconception is not far from the truth. We will be more specific in this guide on how bookies make money.
Setting The Odds
The primary job of a bookie is to create odds. If you do not know about it, you need to hire an odds compiler or use a pay per head software such as Power Pay Per Head to get betting lines for your book.
The odds that oddsmakers create determine how many wagers a bookie can take and how much money they can make. The process of creating these odds is called pricing the market.
Usually, an oddsmaker starts by evaluating several aspects to create odds that accurately reflect an outcome. They also have to ensure that a bookie will make a profit.
Oddsmakers analyze statistics and apply their sports betting knowledge to create odds. For example, suppose Manchester United is playing against Manchester City. The two teams have played multiple games before, hence a lot of statistics to rely on when setting odds.
Looking at the English Premier League 2021-2022, Manchester City seems to be performing better than Manchester United. As an oddsmaker, I would give Man City a 60 percent chance to win and 40 percent for the other team.
Regarding odds, they would like something like 1.67 for Man City and 2.50 for Man United. At this point, there is no vigorish or profit for a bookie. Thus, I have to adjust the odds further to include a vig.
Setting The Vigorish
The vigorish, often referred to as the vig or juice, is a crucial component in sports betting that ensures the bookie makes a profit regardless of the outcome of a bet. It is essentially the commission that the bookie charges for accepting and facilitating bets.
Let’s use your example of the tossed coin to illustrate how the vig works. Without any vigorish, if two clients bet $100 each on a tossed coin (with a 50% chance of winning), the bookie would have a total of $200 in wagers. If one client wins, the bookie would pay out $100 to the winning client, and the bookie would be left with $100, breaking even.
Now, let’s introduce a 5% vigorish. If the bookie includes a 5% profit margin in the odds, they would adjust the odds accordingly. For example, instead of offering even odds (1.50 for Man City and 2.00 for Man United), the odds would be adjusted to 1.59 for Man City and 2.38 for Man United.
If both clients bet $100 each at the adjusted odds, the bookie would have a total of $200 in wagers. If one client wins, the bookie would pay out $159 to the winning client, and the bookie would keep the remaining $41 as profit.
The key to successful bookmaking is to set odds and adjust the vigorish in a way that balances the book. Balancing the book means ensuring that the total amount of money wagered on both sides of a bet is roughly equal. This minimizes the bookie’s risk and ensures a steady profit regardless of the outcome.
Managing the vigorish and balancing the book requires a combination of experience, knowledge, and analysis of betting patterns and market trends. It is one of the fundamental skills that successful bookies must possess to run a profitable sportsbook.
Balancing The Book
Every bookie wants 50/50 betting on both teams. But, this is nearly impossible. Therefore, an odds compiler has to balance the book to ensure a perfectly balanced market.
An imbalanced book could lead to losses. That is why you keep seeing odds change as betting action progresses. This means odd compilers have to be on the lookout in an attempt to balance the book.
Typically, an oddsmaker has two options;
- Decrease the odds that leading to an imbalanced book
- Increase profits that will make the bookie more profit
Using the example above, a balanced book would look like this;
- $6000 wagered on Man City at an odd of 1.59
- $4000 wagered on Man United at an odd of 2.38
If Man City wins the game, the bookie will pay $9540 and remain with $460 as profit. If Man United wins, the bookie will pay $9520 and retain $480 as profit.
Suppose $5000 was wagered on Man City and $5000 on Man United. The bookie will pay $7950 when Man City wins and $11900 if Man United wins.
This means team A has to win for a bookie to make money. Otherwise, a bookie will lose $1900 when Team B wins.
This second scenario is for an imbalanced book. An oddsmaker can increase the odds on Man City to encourage more bets or decrease the odds on Man United to discourage bettors from staking on it.
How do bookies make money from bad bettors? Most bettors are not professional. They bet on a team because it is their favorite.
They do not look at statistics or anything before placing a bet. In fact, they rely on their emotions and inaccurate statistics to place bets. For example, a player might be overly confident that Cristiano Ronaldo joining Man United would improve the team’s score.
You fail to consider that Ronaldo needs the whole team to score. Without teamwork, the team might even perform worse than without him.
If a bettor is looking at betting like a lottery, expecting big wins, they are bound to fail. For example, suppose you want to earn $100000 by betting $100. You will add several bet markets to the bet slip until the possible payout is $100,000.
You forget that having more bet markets in a bet slip reduces the chances of winning all games. Remember, all the teams you bet on must win for you to get the payout. When you lose the bet, you feel like you have lost $100,000, not the money you wagered.
You feel compelled to recover your money by betting some more. This irrational betting is something bookies use to make money. Incidentally, there are hundreds of players chasing their losses and betting based on anger.
Start Making Money Today
You now have answers to how bookies make money. The remaining part is to launch your bookie and start implementing the above tips. Remember, implementing one thing is not enough to make money.
Instead, it would be best to create quality odds, set a vig, balance the book, and hope to get several bad bettors. With that said, it is time to launch a bookie and start taking action. Contact Power Pay Per Head to get bookie software and make money.