Put simply Bookmakers will take your money in return for a bet. If you win, you’ll get more money than you gave and if you don’t, you’ll get nothing. You may think that this is sort of similar to a casino, however, what makes bookmakers different is that they will typically take a marginal profit, regardless of if you win or lose!

Bookmakers can’t control the outcome of the events you bet on, so they ensure a profit by setting the odds of a wager so that they can guarantee a profit. This is because unlike most punters, Bookmakers don’t want to take huge risks, they want to make consistent profit for the long-run, after all, they are a business.

So regardless of the outcome Bookmakers will want to make money.


How do they do this?

Let’s say theoretically, there were 100 punters. each of them were to place a bet, the toss of a coin has two outcomes, win or lose. If there is 50% chance for each outcome and the Bookmaker acted like a middleman they would never make money, because they’d take 100 punters bets and give it all out to the winners

In order for Bookmakers to be profitable, they have to a margin, this is typically justified because they’re dealing the bets. This way, whilst the payouts will be slightly less for punters the Bookmaker will make money.

This is typically built-in with the odds. Let’s say the odds were at 1.9. So if you placed £10 and won you would get £9 in profit. If every one of those 100 punters did this, regardless of the outcome the Bookmaker would be making just under 5%, giving them around £1000 in profit.

Bookmakers can control those odds based on the events taking place. But put simply, on every £1000 in bets they will take about £50.

These are just simplified versions because obviously no game is really 50%, there are a ton of different outcomes, several different types of bets and imbalances in matchups.

The Bookmakers Odds Compilers

Odds compilers set the odds. Similar to trading, they will price the market and set the odds depending on the market. The odds will determine the bets that are taken as well as how much money will be made.

Odd compilers will use a few pricing strategies to create these odds. For example, they will make sure that the odds reflect the likeliness of a particular outcome but still have their built-in profit margin because they want to guarantee a profit.

Most of this will be determined by statistics, such as winning rates, team matchups, recent performance and past history.

Let’s take our coin example and put it into a real matchup of Tennis, there is a one on one between Player A and B. The Compiler will use statistics to create the odds but they will be very knowledgeable about tennis and will have a good idea of the chances of each outcome.

So with all their research and calculations done, they conclude that Player A has a 60% chance of winning over Player B. Those odds would be 1.67 and 2.5. These odds don’t include their margin though, so they would then reduce the odds of both players. So if they want to make a 5% margin they will reduce odds to 1.59 and 2.38. This ensures that Bookmakers take a margin and the odds will make sure that they make money in all outcomes.

Bookmakers have a mathematical advantage over punters. No one can guarantee money but over the long run, bookmakers normally come out on top. What you’ll find is that unlike casino games however, the odds are not completely against you. You could actually turn out on top if you played it well. Bookmakers are successful in making money, however part of that is also because a lot of bettors make bad bets.

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