How Do Bookies Make Money

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The Math Behind the Salary of a Bookie. What percentage do bookies take? That question refers to the book fee that is collected from a wager. Bookies usually take around 10 percent. We look at how bookmakers set their odds so that they would make money off the bettors. A bit more on decimal and fractional odds: https://support.skybet.com.

< Return to understanding decimal oddsGo to how to use a free bet >

Introduction

A bookmaker is a commercial enterprise that accepts bets on sporting events and novelty markets such as Politics and TV Specials at agreed odds. The range of betting events depends on the country in which the bookmaker is located. Odds compliers set the odds with a built in profit margin for the operator. The objective is to take a range of bets at different odds to guarantee a profit regardless of the outcome of the event. The profit margin is the cost of supplying such a service.

Bookmakers aim to take bets across the range of outcomes that reflect the odds. A betting market is fluid in that the odds makers adjust the odds in line with the weight of money on each option. Bookmakers spread the risk by laying off bets when the liability is beyond the accepted level of exposure. They don’t look to make money from the bets but on the balance of stakes and payout. Bookmaking is legal in regulated countries like the United Kingdom.

Types Of Bookmaker

The bookmaking landscape changed from the end of the last century. In the UK, bookmaking activities were traditionally conducted over the telephone, at racecourses or with cash in licensed betting offices. The internet has transformed the bookmaking industry but the customer, or bettor, can choose from a number of ways to place a bet. There are now three types of bookmaker and most of the business takes place online:

Fixed Odds

A fixed odds bookmaker issues a range of prices (the odds) in fractions to create a betting market. For example, the ‘bookie’ offers odds on the three outcomes of a football match, most commonly after 90 minutes. The three options are Home Win, Draw and Away Win. The odds have a built in profit margin or house edge. There is a simple calculation to determine the bookmaker’s probability from each option:

+100/(A + B/B)%

So, for odds of 2/1 the calculation is +100/(2+1/1) = 33.00%

Here is a typical match result market for a football match:

Home Team 11/10 +100/(11+10/10 47.62%

Draw: 9/4 +100/(9+4/4) 30.77%

Away Team 5/2 +100/(5+2/2) 28.57%

TOTAL: 106.96%

This book is said to be over round because the components total more than 100%. The bookmaker has set the odds with a theoretical profit margin of 6.96%. The art of bookmaking is to take bets on each option that reflect the probability and generate the profit.

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How A Bookie Operation Works

Spread

The growth of spread betting coincided with mass use of the world wide web on the internet. Spread betting companies grew from traders betting on currencies and financials in the City of London. The bookmaker issues a spread and the bettor or trader bets on the outcome being higher or lower than the spread. Spreads are expressed in two numbers and traders buy at the higher number and sell buy at the lower number.

For example, the spread on the number of goals in a football match could be 3.1-3.3. A bettor who thinks there will be more than 3.3 goals, buys at 3.3 while a bettor who thinks there will be less than 3.1, sells at 3.1. The spread betting bookmaker makes money from the difference in the stake and payout. Markets fluctuate based on the balance between buy and sell stakes.

Exchange

Exchange betting first appeared in the betting industry at the start of the century. Betfair was one of the first operators and that bookmaker now dominates the industry. Betting exchanges provide the infrastructure for peer-to-peer betting. They bring together backers who want to bet on something to happen and layers who want to bet on something not to happen. Bets are matched at a mutually beneficial price, partially matched or not matched at all. Exchange odds are expressed in decimals.

Exchange bookmakers issue a back price and lay price for all outcomes in an event. The back price is always lower than the lay price. Here is a typical market for the match winner after 90 minutes in football:

Home Team Back Price 2.26 Lay Price 2.32

Draw: Back Price 3.35 Lay Price 3.40

Away Team Back Price 3.65 Lay Price 3.8

Exchange bookmakers don’t make money from the outcome of bets but by charging a commission on winning bets. The business model guarantees a profit regardless of the outcome.

Types Of Bet

There are three types of bet across the range of bookmakers. The way each type of bookmaker makes money is different but all the betting markets fall in the following categories:

Pre-Match

Bookmakers publish betting for a sporting event a few days before the event takes place. The odds can fluctuate based on team teams and injuries. Developments have an impact on the weight of money for each outcome and bookmakers change the odds accordingly.

In-Play

The development of the internet has led to a growth in in-play betting. Trading takes place during the action and the odds fluctuate in line with the progress of play and the score. In-play betting is suspended after a significant event such as a goal in a football match.

Ante-Post

Bettors can place wagers on the outright winner of future sporting events in ante-post betting. For example, bookmakers introduce ante-post betting on the major championship races at the Cheltenham Festival months in advance of race day. The odds fluctuate in line with betting activity.

Betting Sports

The core betting sport in UK bookmakers is horse racing. Internet betting saw the growth of more sports-orientated bookmakers. Football is by far the most popular online betting sport and most bets are placed on matches in the English Premier League. Tennis is the second biggest sport for online betting. More tennis bets are placed on in-play markets than before matches begin. UK-facing bookmakers feature a wide range of cricket, rugby and golf markets. Operators who serve the mainland Europe market focus on sports such as handball, volleyball and basketball. The popularity of sports for betting is consistent across the three types of operation. Bookmakers make money in various ways but the markets and sports are the same.

< Return to understanding decimal oddsGo to how to use a free bet >

With the right sports betting software, there’s no telling how much do bookies make. Although the coronavirus pandemic affected revenue generation, most individual sportsbook operators had no problem weathering the storm.

Strike that last sentence. Bookies who usedbookie software had no trouble keeping their sportsbooks afloat. There were a few reasons for that.

How do bookmakers make money

First, PayPerHead agents could use the company’s betting software for free. These agents didn’t have to pay a dime from the start of the sports shutdown to August 10.

Second, per head agents pushed non-traditional betting options such as the digital casino, the online racebook, and the live dealer casino.

Third, and perhaps most importantly, players decided to make non-football, basketball, and baseball wagers.

How Do Sport Bookies Make Money

All of it has added up to a fall and winter football season that could blow by last year’s total revenue, which is why the answer tohow much do bookies make in a calendar year is as much as they want.

Like all business owners, bookies should set revenue targets.

All business owners set targets. People who run businesses where they sell a lot of products or a single product a lot of times during 30 days, set monthly revenue targets.

Those business owners must keep track of inventory per month. When there isn’t a pandemic, businesses like restaurants must keep track of stock daily.

Bookmakers should think of revenue on a monthly and then a yearly basis.

We call bookie sportsbook owners pph agents after they sign-up with a gambling software providing company. Pay per head services companies charge every month. What these companies charge depends on how many players a bookie has.

Maths of How Bookies Make Money

The charge is per unit. Check out an example.

  • The bookie provides betting services to 10 players
  • Cost per player is $13
  • Total cost per month is $130

The overhead for a bookie with 10 players per month is $130. Now, the bookie knows he or she must make at least $130 per month to break even.

The bookie can break down the $130 into quarterly revenue, monthly revenue, or our favorite, seasonal revenue.

How does a bookie make money with seasonal revenue?

A bookie makes seasonal revenue by concentrating on a season or two, where they get most of their revenue. The reason this is our favorite is because this is how many bookies operate.

How Do Bookies Make Money

Many bookies make most of their revenue from a single season during the NFL and college football seasons.

Calculating seasonal bookmaking revenue

How Do Cricket Bookies Make Money

The way to calculate seasonal revenue is to a) go off past player habits or b) make future revenue assumptions. Some bookies use a combination of both.

The way to go off past player habits is to look at player reports. Betting software for bookies often provides player reports.

Pay Per Head bookmakers can access player reports without any issues. Allpph sportsbook agents must do is check out last year’s player reports.

They can then strategize around those reports. If a player, as an example, wagers $100 each week on Denver, and Denver plays 16 regular-season games, the revenue is $1,600.

The bookie can now assume how much in fees the player will generate. The assumption is 10%. So, 10% juice from $1,600 equals $160. The player can use the layoff account to ensure they keep the $160 in vig.

How Do Bookstores Make Money

Making future seasonal revenue sportsbook betting assumptions

Let’s consider 10 players who bet on sports through a bookie. We’ll assume the bookie generates $100 from each player each week during a 17 game NFL Regular Season.

How Do Bookies Make Money On A Moneyline

  • $100 x 10 players equal $1,000 per week in revenue generation.
  • $1,000 times 17 weeks equals $17,000 generated for the NFL season.
  • $17,000 x 10% juice equals $1,700 in profit.
  • $130 per month x 12 equals $1,560 per head sportsbook fees.
  • $1,700 minus $1,560 in fees equals $140 profit.

The bookie has made $140 in profit just through seasonal betting. But, the bookie will most likely make much more than that.

How Do Illegal Bookies Make Money

In our assumption, we shut off wagering after a 17-game regular season where 10 players wagered $100 per week.

We didn’t consider the NFL playoffs, college football games, the college football National Championship, and the most wagered upon sports event per year, the Super Bowl.

We also didn’t count the NBA, MLB, the NCAA Men’s College Basketball Tournament, horse racing, digital and live casino wagering, and non-traditional betting options like the U.S. Presidential Election.

Per year how much can bookies make?

How much bookies make per year depends on the pph agent. Bookmakers make as much money as they desire.

The key is for sportsbook owners to know their players. By doing so, they can calculate seasonal or yearly revenue. They can even calculate monthly revenue if their players are consistent in theracebook orcasino.

The best thing for bookies to do isto import their players. Only Payperhead.com offers the most funding and payment options, including credit cards. They can also profit from one of the topreferral programs in the industry and take advantage of our $3 per head for 3-months promotion.