Key Takeaways
- How bookmakers make money?
- How much do bookies make per year?
- How does the bookmaker change the odds?
- How do bookmakers balance their books?
The world of betting revolves around making money and so you are unlikely to come across a bookmaker who will run in the loss to give very fair odds. It is expected that every bookmaker seeks to earn a profit out of the bets that you make.
The basic principle of bookmaking
Before trying to understand How bookmakers make money, it is necessary to know who is a bookmaker. A bookmaker is someone who takes bets and pays them off, making money from every bet that any customer would place with them. The basic idea of bookmaking is paying out less than what was received. This is the way bookmakers can make profits and keep the business going.
Now, not even bookmakers know the outcome of the game. This is the central idea behind betting. You will get paid more on correctly guessing the result of the game. You also will lose all the money if you happen to make the wrong guess. This uncertainty is what helps bookmakers in earning their profits. Also, a bookmaker might not be able to control the outcome of the game. They do get to decide how much money they end up making. They adjust the odds and set them such that they would make money regardless of the outcome of the game.
How do bookmakers make money and how much per year?
Most bookmakers earn their share by employing a technique called charging Vigorish/ the overround, where the Vigorish is often known as just Vig. The principal or central idea behind this method is that they change the odds in their favour. If we are to talk about the yearly earning of any bookmaker, it depends mainly on two factors. The volume of bets and the odds that they offer.
Charging Vigorish/Vig/The overround
This method is used by the bookmaker to change the odds by introducing something known as the Vig. Vig or sometimes also known as juice, margin, or the overround. It is created with the sole purpose of giving the bookies advantage. You can even think of it as the commission that the bookie will charge you for laying the bets. Let us take an example of a coin toss to understand the concept of Vig thoroughly.
- For a simple coin toss, there are only two possibilities. It can either land on heads or tails if you are to look at the probability of any one of the outcomes, namely head or tails. You will see that each one of them has the same chances of occurrence, and that is at 50%. This is 2.0 in the decimal system 1/1 on fractional and a +100 on the Moneyline system. So if you place a bet of INR 100 and you win, you will earn INR 200 —one hundred of the stake and one hundred as the profit.
- Let’s suppose that there are 100 customers, all of them are betting INR 10 on the toss of this coin. Fifty of them decide to bet on tails, and 50 of them choose to bet on heads. If the bookmaker is offering the same odds as the probability of occurrence, they will make no money. It is because they will have to pay out the same amount of money that they got.
- This is where you would see them introducing Vig into the mix. They would instead of offering the odds, which is the same as the probability they would offer slightly lower odds. In this case, they would offer odds of 1.9091, which will be a -110 on Moneyline and 10/11 on the fractional.
- Now, if the same scenario is repeated this time, they would only have to pay out INR 9.09 on every bet that wins. Earlier they would have to pay about INR 10. They make a profit of under INR 1 per bet. So, in this case, with 100 people betting, they would earn about INR 45. This would mean that the Vig is set roughly about 4.5%.
How does a bookmaker make a good book?
It would be seen that if the bookmaker has a well-balanced book on a particular market, he will make the same amount of profit regardless of the outcome of the game. If the book which they have made has an imbalance in it, then the issue would have a role to play in the outcome of the game. It might very well be that bet would result in an overall loss. That is the reason why compilers are used for.
Now let us take a straightforward tennis game between Murray and Djokovic. So, let us say that the odds which are offered with Murray is 2.38 and on Djokovic, it is around 1.59. Let us take another assumption that there is about INR 10,000 in the bets.
In this example, the balanced book would look something like: The bookmaker allows 6000 to be wagered on Djokovic and 4000 on Murray. In this case, the bookmaker earns about INR 460 and INR 480 on both the players.
An imbalanced book would look like: If there are equal bets of 5000 on both of the players. Now, the bookmaker would earn a profit of about INR 2,050 in the case when Djokovic wins but will lose INR 1900 if Murray wins. This case is generally avoided with the help of the odds compiler.
In some instances where one team or player has a very high chance of winning, then the compiler would prefer an imbalanced book to maximize the amount of money that the bookmaker would make.
What other betting/casino guides & strategies are available?
When you are entering the world of betting, it is important to know how the bookmaker works. It will help you strengthen your strategy. After knowing how bookmakers make money and How much do bookies make per year you can go on to hone your betting skills and try out some of the top operators. Wetten provides you with a diverse range of
betting guides
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horseracing.
Conclusion
Now that you are aware why the bookmaker will always have a mathematical advantage when gambling, you can build your strategy in a way that tries to bring a little bit of that advantage to your side. Learning about how bookmakers make money, and How much do bookies make per year can help you form a suitable strategy since you are already aware of what happens behind the scene. The amount of money that the bookies would earn in each bet that they offer might not be the same. In some cases, they might also actually lose money. This depends upon the way that the book has been set and if it is fair or not. To make money, you need to learn to see the value in each bet.
