Ever wondered how much bookies make per annum? While most of us have heard some sort of varied explanations, it is true that we never come across a poor bookmaker. Bookmaking is definitely a route to guaranteed wealth.
Although it is entirely not factual, there is certainly an element of truth in it. Successful bookies do make huge profits.So, if you are wondering how they do it, read on to know more about how they earn money. Let us get started.
Table of Contents
Key points
- Bookmakers are always interested in ‘balancing their books.
- They can achieve this by setting appropriate odds.
- They try to minimize the risk involved by as much as possible.
Heads or tails?
To understand the principles behind setting odds, we can take the example of tossing a coin and get started. When a coin is tossed, the two obvious outcomes included are heads or tails. Each of them has a 50 percent chance of occurrence. This would result in a decimal odd of 2.0 for each outcome.
If a bookmaker was taking down the bets placed on this particular contest, he/she would need to ensure that they take in an equal amount of money in the form of bets on each outcome to balance their books.
Let us say that they take 100 pounds in bets on both the outcomes together. If the final outcome is heads, they give that 100 pounds to bettors who placed their bet on heads. You need to understand that this is offset by the 100 pounds they received from bets on tails.
This implies that they are proportionate now. However, breaking even does not mean making profits, and bookies need to rely on people to bet in equal numbers on the outcomes because that way, they can break even.
Obviously, that is a difficult thing to do and people will only place bets on outcomes they consider to be most likely and profitable, and not according to the equal numbers on two outcomes. Here’s where the concept of setting odds with a ‘margin’ comes into the picture to guarantee the bookmaker a profit.
Balancing the book by setting the odds
Bookies use the concept of setting a margin to ensure profits. Let us take the example of tossing a coin again. In the aforementioned scenario, a bookie would need to gather more than 200 pounds to ensure that they made profits on the bets. You might notice how some bookies often offer odds on the coin toss.
For instance, they will take wagers on markets for the coin toss that happens before football games and cricket matches. If you take a look at these markets on a bookmaker’s website, you can see the odds mentioned as 1.91 and not 2.00. This is not an accurate reflection of the likelihood of each team winning the toss but it also includes the bookie’s margin. They usually overestimate the probability of an event to give them the edge. In this case, the edge percentage they have reserved for themselves is about 2.38 percent.
Compounding
It is obvious how bookmakers cannot be happy with the modest profits they make! In order to enhance their profits, they offer a combination of bets like accumulators. If you wish to bet your money on such chances, do so only after going through all the relevant details from trusted, secure, and popular websites like Free Bets.
If a bookmaker makes a profit margin of 2.26 percent on one of the 1×2 bets, then obviously, that margin will be added to each bet on your accumulator. The more bets on the accumulator, the higher is the margin collected by the bookmaker.
Combined bets like accumulators occupy a huge part of how bookies make money. While this should not discourage you from using them as a form of betting, it is good to know that they are extremely useful in placing bets on favorites.
Summing up
As you have seen above, there is nothing magical or secretive about how bookies make money. It is just a simple case of them employing knowledge of mathematics to make sure that whatever the final outcome of a sporting event is, they will always have a share of the profit!
