You must have thought about how you can become a bookie. Another question that might have popped up is “how does a bookie make money?” All these questions have answers. Today, however, we will not cover both questions.
Instead, we will cover how does a bookie make money. Knowing how a bookie can make money will help you capitalize on each. Below, we explain three ways that a bookie can make money.
Setting and Adjusting Odds While Incorporating a Margin
Do you remember the saying that the house always wins in the casino? The same applies to sports betting because bookies hardly make any losses.
Usually, a bookie offers odds that are to their advantage. In other words, bookies apply several techniques that ensure that odds work in their favor without bettors realizing it.
One of these techniques is incorporating juice, commonly called the vigorish or vig, into the odds. The vig is the commission a bookie wins whether team A or B wins.
Every betting line set by an odds compiler is based on a win or lose situation. In other words, a bettor can either win or lose. Ideally, there are 50 percent chances of winning and 50 percent of losing.
To understand how does a bookie make money by setting odds; you need to learn how an odds compiler works. A bookie employs an odds compiler to put together odds of all events. These odds are a guideline of what a bookie might earn from every game.
Considering that a bookie employs the odds compiler, he has to create betting markets in favor of his boss. So, the oddsmaker will look at the likely outcome of a game. Then, he needs to incorporate the overround to ensure the bookie makes money.
Once you know the percentage vig incorporated in the odds, you can calculate the money a bookie is likely to make. Yet, an odds compiler does not just create odds. Instead, he has to consider the history of the teams playing, statistics, and previous matches the two teams have played.
The outcome of a game is 50-50. If a bookie was to offer true odds, they would offer even money. This would mean 2.00 in decimal odds, +100 in American odds (moneyline), and 1/1 in fractional odds. We will focus on American odds because it is popular.
If a player wagered $10 and won, he would get $20, inclusive of the wager amount and profit. If a bookie had 100 clients, half betting on team A and the other half on team B, the bookie would make no money. This is because the money wagered on the losing team will be used to pay the winning bettors.
However, you cannot run your business like this. That is why an oddsmaker has to build a vig into the odds to guarantee that you can make money regardless of the outcome.
So, the new odds would look like 1.9091, -110, and 10/11, depending on the type. If a player still wagered $10 and won, he would get $19.09 instead of $20. Notably, changing the odds makes a big difference.
Unfortunately, the chances of a team winning is not always 50-50. Usually, you find one team that is so much better than the other and has a better chance of winning. This means that a bookie cannot always receive an equal amount of money on both sides.
Suppose one team has a 60 percent chance of winning while the other has a 40 percent chance. The odds would be something like 1.67 for the favorite team and 2.50 for the underdog without any vig.
If a bookie is working with a 5 percent margin, the favorite team’s new odds would be 1.59 and 2.38 for the underdog. The work does not end there because the oddsmaker has to balance the books.
How Does A Bookie Make Money? Balancing the Book
A bookie has to balance the book on any match to ensure he makes the same amount of money regardless of the outcome. Without a balanced book, a bookie would make more or less depending on the outcome of the game.
It is the responsibility of an odds compiler to aim for a balanced book. This is not always possible, but by continually moving the lines, oddsmakers can almost balance the book.
Suppose $6,000 is wagered on team A at 1.59 odds and $4,000 on team B at 2.38 odds. This is a total of $10,000. If team A wins, the bookie has to pay out $9,540 and $9,520 if team B wins.
This will leave the bookie with $460 in profit when team A wins and $420 if team B wins. Here, a bookie makes approximately $450 regardless of which team wins.
Suppose $5,000 was wagered on team A and $5,000 on team B at the same odds as the example above. If team A wins, the bookie will pay $7,950 and $11,900 if team B wins. The bookie will make around $2000 in profit if team A wins and lose $1,900 if team B wins.
Remember, the bookie has to get the extra $1,900 from his pocket because he was not able to balance the book. That is why you see odds fluctuate every few seconds. This happens when the odds compiler is trying to balance the book.
For example, an odds compiler can decrease the odds for team B to discourage players from betting on the team. The oddsmaker can also increase the odds for team A to encourage more betting.
Unfortunately, adjusting odds does not always guarantee a balanced book. But, it helps. Usually, a bookie has to encourage more clients to place their bets.
That way, he increases the chances of balancing the book. While balancing the book is not enough on how does a bookie make money, it plays a huge part in combination with other ways of making money.
There are more novice bettors than professional bettors. Fortunately, you can take advantage of this on how does a bookie make money. While it sounds like a bad thing, you are running a business, and feeling is not part of it.
Your job is to deduce bettor’s feelings and emotions to help you win. For example, if Manchester United lost during the last game with Manchester City, United fans will wager more during the upcoming event hoping their team will get “revenge” for them.
Unfortunately, United might lose again. This is an advantage for you. Bettors wager on a team based on emotions.
Instead of considering statistics, they wager blindly. Similarly, City’s fans can wager more during an upcoming event because they feel confident their team will win just like previously.
Unfortunately, City’s bettors fail to consider that United’s team is better prepared for the upcoming event. It might have a new defender, striker, and other athletes that might make their performance much better than ever before.
How Else Does A Bookie Make Money?
Creating odds and incorporating a margin, balancing the books, and taking advantage of bad bettors are the three main ways a bookie can make money. There are several other things a bookmaker can do to maximize his profits.
For example, a bookie can sign up more clients and encourage them to wager more. Suppose you have 20 clients and the other bookie has 100 active clients. The bookie with more clients is likely to make more money.
However, this can only be true if the bettors at both bookies are wagering equal amounts. Suppose bettors at bookie A spend $20,000 every week while those at bookie B spend $100,000. Clearly, the second bookie still makes more money.
Unfortunately, having more clients does not guarantee that you will make more money. Other factors can influence the outcome.
One of these is the frequency of betting. For example, players at bookie A can wager five times a day, while those at bookie B can wager once a week. In such a case, bookie B might not make as much money even with many clients.
Another factor influencing the amount of money a player wagers. Suppose each player wagers an average of $5,000 weekly at both bookies. The second bookie is likely to make more money.
Lastly, the sport that players wager on can make a difference in the money they make. For example, American players are likely to wager more on American football than soccer.
Start Making Money the Right Way
There are several ways to answer the question’ how does a bookie make money?” We just shared three main ways a bookie can make money and a few extra points on how to increase their income.
At this point, you might be wondering where you can get an experienced odds compiler considering he has been mentioned many times above. The answer is that you do not have to look because you can find one with Power Pay Per Head.
This price per player site offers bookies their bookmaking needs, including oddsmakers. The site comprises experienced agents, oddsmakers, and other experts who can run a bookie on your behalf. Yet, they still give you all the profits.
You too can start making money immediately after you launch a bookie. Contact Power Pay Per Head at 855-492-6007 to get started.