One of the most important and engaging aspect of sports betting is that it’s possible to continuously make money. You need to be knowledgeable and apply the correct approach and it is doable. However, a lot of bettors lose money in the long run. There are several reasons why this happens; one of the reasons is that bookies use specific techniques to make sure they always have the advantage. Then ask: Is your sportsbook making enough money?
Understanding How Sportsbooks Make Money
Bookmakers earn profit by the following:
- They set the right prices of bets (the vig)
- Establishing and changing the betting lines
- Balancing the Book – Removing Risk
- Counting on Bettor Emotions and Inexperience
Sportsbook Making Enough Money: Basic Principle of Bookmaking
The basic principle of bookmaking is obvious and very clear. A bookmaker takes money in whenever they offer a bet to the clients, and they give the clients a payout every time they win a bet. The goal is to take more money in than paying them out. The art of bookmaking is to make sure this is the outcome. That is why it’s very important to use the best bookie software.
Bookmakers can’t control the results of sports events, what they can control is how they stand to win or lose on a certain outcome of sports events. They set the odds for all the bets they lay, which basically allows them to assure a profit.
The best technique bookmakers use to put the odds in their favor is the involvement of vigorish. Vigorish, or vig, also called juice, margin, or the over round. It is built into the odds bookmakers set so that they will make more profit. The bottom line, it’s a fee charged for laying bets. To best explain vig, we’ll use a basic example of a coin toss.
During a coin toss there are two possible outcomes, and each outcome has an equal chance. 50% chance for getting heads and 50% chance for getting tails. If a bookmaker was offering true odds during a coin toss, they would offer even money. This is 2.00 in decimal odds, +100 in moneyline odds, and 1/1 in fractional odds. A winning bet worth $10 at even money returns $20, which is $10 profit along with the initial stake back.
For example, this bookmaker had 100 clients all betting $10 on the toss of a coin, with the bets split at 50% for heads and 50% for tails. The bookmaker would make zero profit from this situation.
This is exactly why they build in the vig to the odds. They can thus make sure, theoretically at least, that they have profit regardless of the result. When two results have equal chances, they usually use the odds of 1.9091 (-110 in moneyline, 10/11 in fractional).
Returning to the coin toss example, the odds on heads and tails would still both be equal, but they would now be at 1.9091. This means that a winning bet of $10 would return a total of $19.09 ($9.09 in profit, plus $10 original stake).
The Role of Odds Compilers
The role of the Odds compilers is to set the odds at bookmaking firms. You can also call them traders, and their role is absolutely crucial. The odds they set ultimately determine how much a bookmaker can take in per wager, and possibly how much money they can make. The action of setting the odds for a sports event is known as pricing the market.
In general, compilers have a target margin. This may change quite necessarily for any number of reasons, but let’s say right now the compiler wants a 5% margin.
A bookmaker’s margin can be calculated by adding the reciprocal of the odds for all likely results and converting the said odds to a percentage. In this situation, there are two outcomes possible, and the following equation would be used.
Sportsbook Making Enough Money: Creating a Balanced Book
When a bookmaker has a balanced book on a certain market, he is going to make nearly the same amount of money regardless of the result. With an imbalanced book, the result would greatly affect the profit, and a loss would be a possibility. A balanced book is most likely the best choice, for distinct reasons, and is what odds compilers usually go for.
Odds on sports events over time tend to change. Odds compilers will gradually make adjustments to make sure their book is balanced. For example, in the situation above, they could increase the odds on Djokovic to bring in more bets on his winning, or they could decrease the odds on Murray to stop more bets on his winning. They could even do both if they wanted to.
IDSca offers full support and assistance to its bookies in handling their online competitors. Visit our site at www.idsca.com or call at (866) 225-5437.