Last updated on April 2nd, 2024 at 11:20 am
Once you get into sports betting, and decide to running your own sportsbook, a lot of questions come up. The first, of course, is how much do bookies make? Just like any business, your profit will depend on the size of your operations, as well as your management of the business. However, before you can even think about how much money they can make, the first question should be how they make money. Thus, in this tutorial we will answer the questions on How Do Bookies Make Money and how they can make enough to profit from it.
While there are several methods and strategies to increase their profits, in the end, it all comes down to the sports betting lines. This is because bookmakers set the lines so they can take a commission from every bet they take.
How Do Bookies Make Money – Its All in Setting the Odds
Even though the old saying about the house always wins is true; this is not a reliable method to rely on. This is because it only works on the long run if they have a lot of money. In addition, it leaves everything to luck and does not control how gamblers will bet on a game. Therefore, in order to have more control on the action, bookies must set sports betting odds.
The odds have 2 purposes. The first is to so they can earn from the commission or Vig. Thus, the odds would be seen a -110 to make a bet. This means that a bettor would have to wager $110 to win $100. Of course, that only works if the betting on both sides is even. So what happens when that happens? They set odds to make them more attractive or less attractive to the bettors.
These odds are what allow bookie to get people to bet on the underdog, when an obvious favorite team plays. For example, the 2023-24 Super Bowl winners Kansas City Chiefs are playing against the Carolina Panthers. The Panthers only won 2 games in 2023 and are an obvious underdog. Therefore, it is a sure bet and everyone is going to bet for them to win.
However, if everyone bets on the Chiefs, the bookie will soon go under as they cannot afford to pay winners every game. To offset that, they create odds so it will be more expensive to bet on the favorite team to win.
here is an example of what these odds would look like:
- Kansas City Chiefs: -500
- Carolina Panthers: +400
This means that to place a bet on the Chiefs to win, the gambler has to wager $500 to win $100. On the other hand, if you bet $100 on the Panthers and they win, you get $400! Using betting odds, gamblers are more likely to consider betting on the underdog. In addition, the damage from the ones betting on the favorite is more controlled so the bookies will lose less if they win.
How Do Bookies Make Money and Profit from It?
Now that we know how they make money, let’s talk about how they can make a profit from it. Overall, there are 4 basic method that allows them to make a profit. These are: Low overhead, correct bet prices and lines, balancing your book, and strategy. Let’s go over them one by one.
Low Overhead. Like any business, the goal is to have the lowest operating cost that gives you the efficiency needed for your target income and growth. In the industry, the best option is to become a Pay Per Head bookie. It’s basically outsourcing your operations to a software provider who will track everything in your book. It will also serve as your command center, where you configure and run your sportsbook from wherever you are. The overhead is lower, as you are only charged per head, or per player. This is opposed to funding people to develop software for you. Here’s a bookie revenue calculator you can use.
Correct Bet Prices and Lines. Your main source of profit is usually the vigorish, or the vig. This you build into the odds you will set, and is basically your commission for each wager you take. Ideally, you want the odds to be favorable for your players to bet on, while still retaining a percentage of the odds for your vig. This means, you will need to balance your book well.
Bookie Priorities
Balancing Your Book. When taking bets from players, you will want an even book, which is the best way to guarantee a profit regardless of the outcome of the game. To do this, you need to monitor the action on a particular wager. So if wagers are leaning towards one side, you need to adjust the odds to attract players to bet on the other side. This is done until you can get a balanced book, and get to guarantee your profit.
Strategy. Balancing your book won’t matter if you are not strategic with how you run your sportsbook. This covers two aspects: your ability to balance your book, and your ability to get the right type of players. If all your players are professionals and are sharp bettors, then you’ll have a hard time getting your action to be made equally. You will need players who are also fans, players who are emotional bettors, even recreational ones. You will need to rely on them making bad bets to get a good profit margin. But not always, or else they’ll leave you. But your ability to read your players will be crucial to your success as a bookie.