This section has doesn’t offer any tips or reveal any useful concepts, but we thought you might be interested in knowing how bookmakers operate and how they’re making huge amounts of money. Understanding the whole picture is always an asset in any business; sports betting is no exception.
There are lots of misconceptions towards how sportsbooks are making money. Some think they’re taking position on every event by betting themselves on one side of that event adjusting the odds in their favor, others think they’re taking positions on both sides plus different other wrong impressions people have.
This is absolutely not the case. Sportsbooks are way cleverer than that and they would never take such huge risks. If you take a little time and have a look at most of the odds for a particular event you’ll notice that most sportsbooks are offering a similar range of odds.
The way they are making their money is pretty straightforward. They calculate their odds including a certain percentage of commission which normally ranges between 3% and 10% which is reflected within the odds they’re offering. It's called the "juice" or also the "vigorish" or “vig”. This is not obvious to notice and verify when looking at regular odds for a particular game like -175 for the favorite and +160 for the underdog for instance. You can’t clearly see if there’s a commission factored into those odds.
You’ll find a more obvious answer when the bookmakers are ambiguous about two teams they consider equal for a particular game. That’s where you’ll be able to clearly see they have their commission built into the odds they’re offering. You’ll mostly see that with professional sports like the MLB, NFL, NBA and NHL.
When this occurs, the odds for both teams playing against each other will show the same number, for instance, -110. They’re kind of saying that both teams are favorites and they can’t take position on which one has an advantage over the other. They then quote them at the same odds.
If we make a quick analysis of what will happen after such a game is over, we get the following:
We know that when there is a minus sign in front of USA odds, it means, in this example, that you have to put up $110 for making a $100 profit. In this case bettor A would have put up $110 on team A and bettor B, also $110 on team B with this particular sportsbook.
By taking these two bets the sportsbook knows it has to pay $100 to the bettor who has selected the winning team. The bookmaker has collected a total of $220 (2 x $110) for this game. It then has to pay back $100 in profit to the winner plus the amount the winning bettor has wagered, in this case, $110. That’s a total of $210 going back to the winner. Obviously, the losing bettor loses his $110 bet.
On this operation, the bookmaker will have made a profit between what he has collected, $220 and what he has paid, $210. That’s a $10 commission out of $220 which is a 4.55% commission. That’s where their money comes from. This doesn’t seem much, but with hundreds of events taking place every day and sometimes tens of thousands of bettors placing wagers with a single sportsbook, this adds up to pretty impressive numbers.
As you understand, they’re not risking any money; they’re just taking wagers in and redistributing the money in accordance to the games results while keeping a part of it as their commission.
Taking a step back, we can easily understand that the more bets they can get for all the events they’re offering, the more money they’re making. With this in mind it’s also very easy to understand why sportsbooks will offer some bonuses when you make a deposit with them. For each and every wager you’re placing, they’re making money no matter what the outcome of the event is.
They’ll make sure they’re always profitable by adjusting their odds all the time until the event has occurred. When too many people are selecting, for instance, the favorite, they’ll raise their odds to the point where it’s no longer attractive for the bettors. The underdog will then become more attractive and many bettors will start placing wagers on the underdog.
We don’t bother with who’s favorite or underdog and to a certain extent, we don’t even really care about what the odds are. All what matters to you is on which team is the algorithm telling you to place your wagers and pocketing your “per win” profit.
This is a simplified explanation of how sportsbooks are always making money. It’s not always simple and easy for them to balance those odds, but as you might have noticed most sportsbooks are part of some large casino operations.
Many of them will hedge themselves using some casino money for balancing and offsetting any discrepancies that may occur between what the odds are and what they should be. This is pretty complex but it doesn’t affect our formula in any way.
The only thing we want you to realize is that there are tens of sportsbooks that have been around for a long time and are very solid operations. We want you to understand that lots of them are making incredible amounts of money which is coming in mainly from sports bettors who don’t really know what they’re doing using no plans at all and with the wrong mindset.
Some other intelligent bettors know it and are capitalizing big time. As mentioned before, there’s virtually no limit to the money you can make and as you’ve seen, sportsbooks are happy and making good money when you’re placing wagers with them. They don’t really care to whom they’re paying the wins and even if they’re paying you pretty big money, it has no effect whatsoever on their results and profits.
You now have the opportunity of being on the intelligent bettors’ side. There are not very many people out there treating sports betting methodically and operating with a precise and proven plan while leaving greed, emotions and feelings aside. We hope this ebook will help you become one of them.