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  • How does a Bookie Make Money

    Gambling is a multi-billion dollar industry with a huge clientele worldwide. Many people think that bookies make millions of dollars each year.

    But, some of them don't know where to find a bookie and the activities that it performs. Bookmakers make money in the following four ways.

    Backing and Laying

    Each wager has two sides, back and lay. Betting exchanges like Betfair have both bookmaking options on all outcomes. A bettor needs to find someone who will lay a wager if they want to back it.

    Bookies act as middlemen between bettors and betting exchanges. They allow bettors to lay and back bets against one another. Bookmakers get a commission whenever bettors trade on their sites.

    Charging Vigorish/Overround

    Generally, sportsbooks add vigorish (vig), also known as margin or juice, to make odds favor them. They build vigorish in odds to increase their profit. They charge bettors who want to lay bets on this commission.

    For instance, a coin toss has two outcomes with equal probabilities. There is a 50 percent likelihood of heads coming up and a 50 percent probability of tails. A bookie would provide even money if they offered the actual odds on a coin toss, such as 2.00 decimal odds, 1/1 fractional odds, and +100 moneyline odds.

    If a gambler wagers $10 on the toss at even money, they will get $20 returns and make a $10 profit. A bookie with 100 regular bettors, each staking $10 on the coin toss, would have 50 gamblers backing the heads and 50 laying the tails. The betting company won't make a profit in such a scenario.

    In the above example, the sportsbook would accept wagers worth $1,000 in total and payout $1,000 regardless of any outcome. This is a key reason why operators build the vig in their odds. It assures them of making a profit in whichever outcome.

    Typically, bookies use 1.9091 decimal odds, 10/11 fractional odds, and -110 moneyline odds when two outcomes have equal chances of occurring. In the coin toss scenario, the tails and heads would have 1.9091 odds. Thus, a bettor would get $19.09 if they stake $10 and make a $9.09 profit.

    If 100 bettors wagered on the toss at the same bookie, 50 gamblers would still wager on heads and 50 on tails. The bookie would have a profit-making guarantee as it would pay out $954.50 and have a $45.50 profit margin due to the vigorish. It would be about 4.5 percent.

    Things change in sports bets as the outcomes have different probabilities. So, bookies offer more betting markets to take in more money.

    Compiling Odds

    Odds compilers create odds and betting lines for bookies. Odds determine the amount of stake a bookie will accept and their profit.

    The compilers price markets for various sporting events by setting accurate odds. They reflect the likelihood of a certain outcome while ensuring that it has a profit margin. Bookies analyze statistics to determine these probabilities.

    Odds compilers need to have experience in various sports to price even markets. Some of them specialize in one or two sports. They have mastered different statistical and mathematical principles.

    Creating Balanced Books

    Each bookie aims at balancing its book on a specific market to make an equal sum of money on any outcome. Having an imbalanced book limits the profit an operator can make.

    If the wagers were evenly spread on each player, the bookie would have an imbalanced book. If Djokovic wins the game, the bookmaker would make a profit and would incur a loss if Andy wins. So, odds compilers often adjust odds to balance the book and prevent a bookie from making a loss.

    Most bookies set a margin when creating odds. They make huge profits when most bettors back a particular side and lose their bets. Some betting companies set betting limits for sharp gamblers to reduce the amount of money they often payout.

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    This article was originally published in blog: How does a Bookie Make Money started by Sonny
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