All About Bookmakers

Published: 27/09/2010
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When betting on team sports and horse racing became popular in mid-19th century Britain, the operators of gambling clubs, back room betting shops at inns, and trackside betting stands would record all of their customers’ wagers in books. This led by 1874 to the phrase “making a book” and the description of the bet-taker as a “bookmaker.”

Today, bookmaker refers to any organization or person that takes bets on sports and other events at agreed upon odds. Slang terms applied in the U.K. to this profession include “bookie” and “turf accountant.” In the United States, wagering on sporting events must be done through licensed “sportsbooks.” For horse racing, there are separate facilities known as race books, off track betting (OTB) shops, or (in New Jersey) simulcasts.

A bookmaker may work with an “oddsmaker” or “odds compiler” who calculates the probability of various outcomes. It is the bookmaker’s job to offer the betting public the opportunity to wager on those outcomes and pay out the winners at the stated ratios—the so-called “betting line.” This process is called “laying odds,” and it is the basis for a symbiotic relationship. Bookmakers lay odds and bettors back them—the foundation of all bookmaking activities.

Most people mistakenly believe that a bookmaker earns a living off punters’ losing bets. In fact, quite the opposite is true. Profits are derived from the commission charged on the winnings paid out. This amount goes by several names—the margin, vigorish, vig, juice, or over-round. It tends to average around 5% and a good bookmaker can expect to retain about 2.5% to 3% of all revenues handled. In other words, to earn £30,000, about £1 million in wagers are needed.

Another common misunderstanding about bookmakers is that they are gamblers and risk takers. Again, nothing could be further from the truth. It is not the bookmaker’s role to take chances—that is the punter’s responsibility. Instead, every attempt is made to “balance action” by getting as much wagered on one side of an event as on the other.

A simple example is a coin toss. The result will be either heads or tails, and the true odds of either outcome are 1-to-1, or so-called “even money.” Suppose £100 is wagered on tails and £100 is bet on heads. The bookmaker who takes a 5% commission from the winnings to cover the cost of setting up the opportunity will pocket £5, no matter what the outcome.

However, if only £50 is wagered on tails and £100 on heads, the bookmaker would be at risk. Should heads come up, the bookmaker would need to cover the difference out of pocket. To attract more wagers for tails and balance the action, an incentive may be offered, such as reducing the commission to 3% or paying 1.02-to-1 on tails winners.

Adjustments in the odds or payouts are called “moving the line.” Bookmakers are constantly looking for ways to keep everything in balance, which accounts for discrepancies in the odds offered by various shops.

Should the bookmaker be unsuccessful in the attempt to balance the wagering, it may be necessary to “layoff” some of the bets. That doesn’t mean returning any of the wagers. It refers to the practice of one bookmaker backing the overbooked side with another bookmaker. It is like spreading the risk around.

Looking for small variations between bookmakers odds can turn up some golden opportunities for bettors, as the lines move and balance is sought. On the other hand, any bookmaker found offering odds greatly out of synch with the general market should be suspect. The variances are usually not too great, since they all work with the same events and the same betting public.

The leading bookmakers are easy to find. They have established reputations over decades of satisfying customers. The poor ones show up on blacklists. All bookmakers need to be licensed and, in most jurisdictions, bonded as well. Oversight is strict. In the U.K., there are four major “high street”—William Hill, Ladbrokes, Coral, and the state-owned ToteSport—although others have been growing rapidly thanks to the Internet, including Betfred, Victor Chandler, Sky Bet, Bet24, Stan James, and Bet365, among others.

Published on: 27/09/2010

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