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how bookmakers work to make money

How Bookmakers Work To Make Profit : Gaming the Gamers

Sports betting is a dynamic domain and it is extremely difficult to remain profitable for long. Still, some professional bettors are able to game the system and make profits consistently. These people might make it seem easier but believe us when we say that you need to know the right strategies to succeed.

Still, many bettors lose money in the long run and it makes us wonder is it so. Factors can be many but the most prominent one is the bookmaker.

Bookmakers are in the industry to make money and they use certain techniques to make sure that is always at the advantage. Simply put, successful betting is all about overcoming this advantage. Consider bookmakers as your opponents and learn how you can beat them in the game. How exactly are you going to beat the bookmarkers?

Understand How Bookmakers work

In this article, we are going to explain in detail how exactly bookmarkers work to keep themselves at an advantage. We will also ascertain ways that keep bettors at a loss.

Bookmarkers Approach Towards Profits 

Bookmakers are money minded people. Whenever you place a bet you are going against a team of professionals who use the best in the industry software and other tools to keep you from making profits. If we have to put a finger on the specific strategies, then bookmakers make money by:

  • Setting the right bet prices (also known as the vig)
  • Setting and changing the betting lines
  • Balancing the Book to eliminate the risk

Last but not least, counting on bettors’ lack of knowledge and overindulgence of emotions

Start with understanding the basis of bookmarking 

Bookmarking as a process is quite simple and straightforward. Every bookmarker takes money whenever a customer lays a bet and pays money out every time their customers win. The whole principle of remaining profitable is to make more money than the payout. The real skill of a bookmaker is to make sure money flowing in is always more than money going out.

Now bookmakers cannot control the outcome of a sports event but they can always control how much money they stand to lose or win on a particular outcome. Bookmakers ensure to set the odds of the wagers they lay in such a manner that they ultimately end up making a profit.

That’s a pretty neat trick but if you get skilled enough to beat the odds set by them, you are in for a long term success.

Know Vigorish Definition or the Vig

Also known as the juice, the overground, margin or just the vig, vigorish is the factor that is built into the odds set by the bookmakers to help them make a profit by putting odds in their favor. Simply put, the vig is a commission charged by the bookmakers to make for laying bets.

Let’s learn about charging vigorish with an example.

Consider a simple example of a toss of a coin.

Tossing has only two possible outcomes that have an equal probability of 50%. Getting ahead is as much likely as getting a tail.

If you bet on the above event with a bookmaker, if he is offering true odds he will provide you will even money odds. That is +100 in Moneyline odds, 1/1 in fractional odds and 2.00 in decimal odds. If you are still not aware of what that is, check out our detailed post on types of sports betting odds. A successful bet will entitle you to win a $20 (stake + profit) in return of wagering $10.

Coming back to the bookmaker. Suppose there are 100 customers who are placing bets with him on the toss of the coin. Half of the customers are betting on tails while the other half on heads. In this scenario, the bookmaker stands to make no profit, whatever may be the outcome.

how do bookmakers work

As the above image suggests, the bookmakers will be taking a total bet of $1000 in wagers but they will also pay out a total of $1000 in winnings no matter what may be the outcome. This is not a favorable scenario for bookmakers as they are not making any profits.

To avoid such a scenario, bookmakers build in the vig into the odds. This guarantees them theoretically, that they will make profits regardless of the outcomes.

How do they do it?

Easy. For the above example, the outcomes are equally likely. In such cases, bookmarkers will not offer even odds but something like 1.9091 (-110 in Moneyline, 10/11 in fractional).

If the above odds are applied to the toss, now the odds on heads and tails are still the same but they are not even. This means when you wager $10 now, the return would be $19.09. Let’s see how this changes the scenario for the bookmaker now.

Suppose 100 customers are betting on the outcome with 50 wagering on tails and the other 50 betting on heads.

Let’s see how that looks for the bookmaker now, with 50 customers betting on tails and 50 customers betting on heads.

how do bookmakers set odds

As you can see in the image above, a small change in the odds has made a big difference for the bookmakers. It is also evident that now the bookmakers are making a guaranteed profit irrespective of the outcome of the toss. Now the total amount being paid out by them is $954.50 against the $1000 that bookmakers have received for the wagers. Now they are making a profit of $45.50 due to the built-in vigorish. Usually, the vig is represented as a percentage in this case it is roughly 4.5%.

OddsMax has oversimplified the who mechanism of building in the vigorish but we hope you are able to understand how it is used by sportsbooks to their advantage. When it comes to actual sports events, things get a little more complicated. The outcomes are seldom equally likely and in some events, there are more than two outcomes.

For all these reasons, bookmarkers don’t make money just by charging vig and the overall process of being profitable can be a lot more complicated.

This why they need the help of odd compliers to remain profitable at all times.

Odds Compilers – How Do Bookmakers Set Odds

The sole aim of odd compilers is to set the odds. Trader is another term used for them as it is they who decide the odds that determine how many wagers a bookmarker will take in and what can be expected profits. The whole act of setting the odds for a sports event is also known as ‘pricing the market.’

There are a number of factors that are taken into account when pricing the market. Odd compilers have to make sure the set odds reflect the outcome of an event as accurately as possible while also leaving scope to built-in a profit margin. The decision is largely driven by statistics, but a certain amount of sports knowledge is also needed.

This is why it is a prerequisite for compliers to have a thorough knowledge of the sports for which they are pricing market. A solid understanding of statistical and mathematical principles is also mandatory for them.

To better understand how an odds compiler might price market let’s take an example.

Consider a tennis match between Andy Murray and Novak Djokovic. In the context of abilities, both these players are the closest match. Not to set the odds, a compiler has to consider a number of factors such as the current form, ability of each player on the relevant field and also how was the performance in the past meetings.

Suppose based on all these factors the compiler thinks chances of Murray winning are roughly 60%, then Djokovic has a 40% chance of winning. The odds reflecting these changes will be Murray 1.67 and Djokovic 2.50.

Now, these are pure odds and compiler needs to the built-in vig. Often compilers are provided with a target margin they have to set. For this example, let’s assume the compiler wants around a 5% margin. He will reduce both the odds by 5%, making odds 1.59 for Murray and 2.38 for Djokovic.

Summary

If you went through the entire post attentively, then now you know how bookmakers use mathematics to create an advantage for themselves. It may be they do not always win on a single market but the vig advantage ensures that they always remain profitable in the long run.

However, if you are able to strategize yourself to overcome this advantage you are going to become profitable in the long run. That being said, bookmakers do not always make a profit because of the mathematical advantage but also because most bettors put bad wagers much than good wagers.

We are sure you do not want to be one of those bettors, which is why to spend a lot of time on understanding what makes a good bet. OddsMax already has some useful resources for you to check:

Tips To Use Moneyline for Football Betting

5 Proven Soccer Betting Strategies To Double Your Winning Chances

You have the best chance of making money when you are skilled in identifying the opportunities to place a bet as well as able to control your emotions. Do read our post, Common Traits That Will Make You A Successful Bettor to know what traits make you a consistently profitable bettor.

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