How much do bookies make 2021
When dipping into the sports betting waters, you should be aware that you cannot always win. Making profits in the long term isn't easy, but you can dramatically increase your chances by applying the right strategies. However, bookmakers also want to remain profitable, and they also apply specific techniques that bring them an advantage. If you're going to beat your opponent, in this case, it's a bookmaker, you need to learn how do bookies make money. Our team of betting experts will explain to you how bookmakers ensure the advantage for themselves and how you can overcome it.
- Professionals set the odds
- They always build in the house edge
- Odds movements help in balancing the book
- Bookies count on irrational bettors
How exactly are the bookmakers making money?
In this article, we will drive you through the techniques that bookies use to make profits. You will learn how they set the odds, adjust betting lines, balance the book, and capitalize on bettors' bad bets. After getting deeper into their tactics, you will know how to reduce bookies' advantage and increase your chances of being profitable in the long term.
Experts are setting the odds
The essential step for a sportsbook to establish its advantage is the odds setting. Every sportsbook has a team of experts who work on the prices' definition before they got published. They are known as odds compilers or traders, and they need to cover different aspects to set the odds correctly.
Of course, the betting odds need to reflect the possible outcome of a specific event fairly. Odds compilers need to be experts in sports knowledge for which they set up the odds. Therefore, a trader is usually focused on one or two sports, at most. Besides that, traders also need to anticipate how much wagers would be placed on a specific event and how much money a bookie could make. Traders' job doesn't stop here. They also need to take into consideration to built-in a profit margin.
The Vigorish, Payout rate or House edge
The Vigorish, or vig, is a basic technique that bookies use to set up the odds in their favor. It represents the house edge built-in the odds in order to help bookies make profits. We can also consider it a commission for laying punters' bets. Let's see how the Vigorish works in practice on a simple example.
Super Bowl betting generates a vast income, and coin toss is one of the popular special bets. The probability for each outcome is 50%, and in theory, you would expect to get the odds of +100 for either result. If a bookie receives the same number of bets on both outcomes, it won't make any profits. In that case, the sportsbook would need to pay out the exact amount they received in total bets for the coin toss.
Therefore, bookies calculate the vig that can theoretically make them profits regardless of the coin toss bet outcome. That's why you'll never find +100 odds for this kind of bet, and it's more likely that the odds offered would be -110. It means that if you place a $10 wager, you can receive $19.09. Furthermore, if ten customers place five wagers on heads and five bets on tails, the bookie will take $100. Regardless of the outcome, a sportsbook would pay out $95.45. It means that the vig is 4.55% (100-95.45), and the payout rate is 95.45%. However, this is just a simple example, and in more complicated cases, the sportsbook needs to balance the book.
Balancing the book and eliminating the risk
By balancing the book, a bookmaker aims to make approximately the same profit regardless of the outcome of an event. If a bookie has an imbalanced book, it can result in losses.
If you are a sports bettor, you must have seen the odds fluctuate at least once. These chances are triggered by traders' attempts to balance the book. If a particular outcome can lead a sportsbook to losses, a trader can apply one of the two techniques.
- Increase the odds for the results that can bring them profits
- Decrease the odds on the outcome that caused the book imbalance
Of course, it is tough to have the book fully balanced, but these techniques can get it very close to a perfect balance. The volume of bets plays an instrumental part in betting up a balanced book, and that's why it's crucial for bookmakers.
Counting on bad bettors
Many punters are not profitable in the long term, and bookies count on their weak points to generate profits. The main two reasons why so many bettors are unsuccessful in sports betting are the lack of knowledge and emotional control.
Bookmakers can get big profits from occasional punters who don't follow sports they are wagering on. They see sports betting as a lottery and hope for huge wins with a lower stake. The more selections you have in a bet slip, the fewer chances you'll win.
Other punters cannot control their emotions when betting, and irrational bets usually lead to further losses. On the other hand, that means more profits for bookmakers. Therefore, bettors should avoid placing bets based on anger, chasing losses, or supporting your favorite team.
Example from New Jersey: $52.9 Million in May
Sports betting in New Jersey has been legal for three years, and bookmakers keep being profitable. There are 16 legal sportsbooks in this state, which is among the first that made sports betting available within its borders.
According to the latest reports, sportsbooks in New Jersey received $800 million in wagers in May 2021. Surprisingly, it is an increase of almost 9% from the income generated in April this year. When it comes to revenue, New Jersey bookmakers made profits of $52.9 million in May, which is more than five times compared to the same month last year.
Now, we can easily calculate how much money a sportsbook in New Jersey could make in a month. An NJ bookmaker received $50 million in bets during May and generated $3.3 million in revenue in the same period. Keep in mind that May is usually a quiet month when it comes to sports betting. And when the season is at its peak, these figures can only be higher. Bookies can generate even more money in years to come since sports betting is constantly on the rise.
Example from an average player
Let's see now how much a bookmaker can profit from an average player. From an example that we mentioned while explaining the Vigorish, we can see that an average vig is around 4.5%. It means that a bookie can earn $4.5 on average for every $100 staked by a punter.
An average player spends around $150 per week on sports betting. We can easily calculate a sportsbook's profit from a single player. In this case, it is $150 * 4.5% = $6.75 per week per one player. Further, we come to the $6,750 profits on 1,000 average players. If we convert this to the monthly figures, a sportsbook can earn $27,000 per month from every 1,000 punters.
Sportsbooks can earn a lot of money, especially knowing that the interest in sports betting is constantly growing. The number of players keeps increasing, and there is no need for bookies to increase the house edge. By applying the techniques described above, they can keep a positive trend in increasing their profits.
Beat the bookies with their weapon
The fact that bookmakers earn a lot doesn't decrease your chances of becoming profitable. Register at legal sportsbooks and get some of the lucrative welcome bonuses. Pick your matches wisely, and look for value in your selections. Don't let your emotions drive you to irrational decisions, stay disciplined, and you'll be successful in the long term!
Bookmakers use various techniques for being profitable, and they consider several factors when setting up the odds. Their professional traders calculate the odds carefully, always building in the house edge. Sportsbooks also make odds movements to balance the book and secure profits regardless of the outcome. Nevertheless, sports betting is more popular than ever, and this industry will continue blooming.