How Bookies Make Money from Taking Bets

Last updated on April 2nd, 2024 at 10:38 am

The job of a bookie or bookmaker is pretty straight forward. They set odds for sporting events and using these odds, take bets from players. From there, they collect money from ones that lost and pay money to the ones that won. However, How Do Bookies Make Money from Taking Bets if it is all about luck?

Bookies do not have a crystal ball that allows them to predict the outcome of a game.

How Bookies Make Money – Key Points

How Bookies Earn Money from Creating Betting Odds
Changing the Odds to Even out Each Side
Balancing the Odds is a Full-Time Job
Modern Bookie Use a Pay Per Head Service

Therefore, they do not make money from having more people lose their bets than win. Of course, they are happy when that happens but then again, it could also work the other way.

Instead, bookies make money in a much more consistent manner.

The way a bookie makes money is by charging gamblers a commission for every bet they take. The commission they charge is know by many names. The most popular one is the “Vigorish” or “vig” and on the street is known as the “juice”.

The Secrets of How Bookies Make Money is in the Odds

We know that in order to make money from sports betting, bookies charge a commission for their services. However, that is not enough due to the chance aspect in sports wagering. This is because no matter how good they are at predicting the outcome of a match, there are no guarantees.

Instead, what bookies have to do is create an environment where they have control over how the people will wager. They do this by creating sports betting odds for various sporting events. By creating odds, they decide how much a player will win and even how much money they will earn.

How Bookies Earn Money from Creating Betting Odds

Let’s say there is a football games between two teams that are equal in terms of talent and coaching. Both teams are so even that the probability of winning for each team is 50%. This means the odds of winning for each team is 1 to 1. The betting table would look something like that:

Teams	Probability of Winning	Betting Odds	Wager	Winnings
Team A	50%	1/1	$100	$100
Team B	50%	1/1	$100	$100

2 of your friends bet $100 on Team A and 2 bet $100 on team B. As the bookie, you hold the money and pay the winner at the end of the game. However, to make a profit from it, you change give yourself a 10% commission by changing the odds.

This means changing the odds from 1 to 1 to 0.9 to 1 so that you earn a 10% commission. Therefore, your friend bet $100 to win $90 while you get $10 from their bet!

Teams	Probability of Winning	Betting Odds	Wager	Winnings	Vig
Team A	50%	0.9/1	$100	$90	10%
Team B	50%	0.9/1	$100	$90	10%

However, this only happen if the wagering on each team is the same. If it is not, you may have to pay the winners from your own pocket. In addition, what happens if a team has better chances of winning over the other team?

Videos On How Bookies Earn Money

Changing the Odds to Even Out each Side

Let’s say Team A has a 75% chance of winning the game over Team B. If that is the case, most people will bet on Team A since they have better odds of winning. For the bookie, that is a problem. If everyone bets on Team A and they win, will have to pay the winners from their own pocket. Of course, if Team B wins, then it is good news for the bookie, but it is risky.

Instead, bookies will change the odds to even out the betting on both teams. Thus, they will make it more expensive to bet on Team A and more advantageous to bet on Team B.

Teams	Probability of Winning	Betting Odds	Wager	Winnings	Vig
Team A	75%	0.9/3	$100	$30	10%
Team B	50%	2.9/1	$100	$290	10%

In this example, the odds to bet on Team A are now 0.9 to 3. This means they wager $100 to win $30. On the other hand, People that bet on Team B will wager $100 to win $290! With these kinds of odds, more people will be willing to take a risk on Team B.

Balancing the Odds is a full-Time Job

It may seem simple on paper, but putting the theory into practice is much more difficult. This is because bookies have to constantly change the odds depending on how many people bet and who they bet on. Needless to say, this requires a lot of work and effort for bookies.

In the old days, bookmakers had to constantly research sporting events to set the odds. Afterwards, it was a constant battle to constantly change their odds. And of course, they also had to take care of existing clients and find new ones.

This is why smaller bookies could only offer betting odds on certain sports as it was too much to handle. In short, balancing the odds is a full-time job that takes up a lot of time and effort.

Modern Bookies Use a Pay Per Head to Increase Profits

Today, things are different for the modern bookmaker. This is because they have access to sportsbook software to help them adjust the odds accordingly. One such service is the PricePerPlayer.com Bookie Pay Per Head Solution which takes care of setting and adjusting the odds.

A Pay Per Head Service is very popular amongst bookmakers because they also provide gambling options for their players. For example, with PricePerPayer.com, bookies can offer casino games, live betting, live dealer games and horse betting to their clients.

In addition, they make the lives of bookies easier by providing 24/7 customer support for their clients. Add providing a betting website to the mix and it makes the job of a bookie much easier. Therefore, they have more time to concentrate on retaining and acquiring new clients.

Smart bookies use PricePerPlayer.com because at $5 or less per player, they offer the most value for the money.

Modern Bookies Use a Pay Per Head Service to Increase Profits

From there, it is just about managing them. This includes deciding which gambling options to give them, setting their gambling limit and whatever else you decide.