How Do Bookmakers Make Money?

What many long-time gamblers have asked themselves at one point in their entire life is this. If you are relatively new to the world of online gambling, or sports betting in particular, chances are, you would have probably asked yourself this question, too.

Is there a truth behind what people say that “every bookmaker always wins”? To fully understand this, we need to identify how things work “behind the scenes” so to speak. You must have a clear understanding of this as it will give you a better view of what decisions in betting will be more favorable to you.

Simply put, having a good insight into how bookmakers make money will give you a better advantage of making money for yourself, too.

How bookmakers make money

While the question of “how do bookmakers make a profit?” sounds silly at first, it is rather critical for any gambler of different skill levels to genuinely understand this question (and its answer) by heart. For starters, the short answer to how betting sites make a profit is by accepting bets on a market and setting up a price that does not entirely represent the differences or probability of the outcomes.

To put it on much simpler words, each bookmaker makes money off of bets. As to how exactly, we’ll touch on to that topic shortly.

The perfect example to explain all of this is through a coin toss. Of course, landing on either side of the coin has a probability of 50%. Betting a $100 will give you $100 if you win. In this case, the odds are equal making it a 100% market.

However, like what we’ve mentioned, online sports betting sites set up their pricing quite differently to that of the true probability of the outcomes. What they do instead is they go beyond the 100% market. The difference is what’s known as “commission”, “overround” or “juice”. This deviation is also most known as “vig”.

It should be apparent to you now that bookmakers are trying to balance the probability of odds between bets to ensure that there will be a fair number of bets or amount of money is placed each.

When bookmakers lose money

Bookmaker Singapore

If you think that the only question gamblers or bettors would come up with is how their bookies make a profit, then you are wrong. While it is a less common question that most people would ask, the question itself is both interesting and informative.

The main issue behind online betting sites losing profit is when they fail to create a balance between their books. Being overexposed on winners is hurting them more than anything. To avoid this, bookmakers must keep the odds on the favorites at a lower price. At the same time, they also need to be mindful of the other bookmakers in competition.

How bookmakers come up with odds and probability

Without getting too technical or doing any complex math here, every bookmaker has its traders that come up with the odds and probabilities. They are the people behind all the decision-making that would ensure profit, all while still keeping things fair for all the sports bettor.

These traders are often seasoned veterans and have years of professional training and experiences. What most people do not know is that despite their great knowledge about sports betting and the entire market as a whole, they are typically aided by powerful tools to make reliable decisions and judgments on probabilities. This is to maintain a fair play.

How bettors affect the market

If you have been paying attention, at this point it may have become clear to you that some factors can affect the books or the entire market as a whole. Among these many factors, one of the most important of which are the bettors or punters themselves. Online betting sites must keep the punters in mind and where their bets are more likely to be placed.

It is in their best interest to always keep things balanced. Balancing their books would ensure a profit and would attract more bettors to place a bet. If only every punter would place their bets in proportion across the books it will be a lot easier for the bookmakers to split the odds or probability evenly and calling it a day.

If all these make sense, the main goal for bookmakers is to force bettors to place their bets away from the favorites. At the end of the day, attracting more gamblers which would give them better value and favor is the way to go for them to make a profit.

How much profit is made by bookmakers

Bookmakers

The short answer is not much. However, having even the least amount of money from vig can still be a sweet profit for every bookmaker. In most cases, bookies aim to have at least 5% of the vig. While this is indeed a very small percentage, the bookmakers and their traders have already factored everything in including the best possible result that would net them the profit.

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