AS the old saying goes, the bookie always wins. From the days of the Peaky Blinders right through to people punting on Belarusian football on their mobile phone, running a book on sporting events has always been a profitable business.
In 2018, UK gambling companies made an astonishing £1.56billion profit from football betting alone, summing up just how lucrative it can be. Many a punter has been left cursing the bookie when a late goal ruins their hopes of striking it rich on a 10-team accumulator but understanding how the big firms make their money can help us enjoy more than just the occasional victory over them.
In this guide, I'm going to run you through how the bookies make those huge profits and explain how a “book” on a sporting event works.
The formula for success as a bookie is pretty simple, take in more cash than you payout. Unlike casino games and electronic machines, which have a house edge built into them, bookies can't control the outcome of sporting events to ensure they will always come out ahead.
However, they can control how much they win or lose by setting the odds and manipulating them in their favour.
Hitting the Vig Time
To tilt the odds in their favour, the bookies use something called vigorish, which is commonly known as the vig, juice, margin or overround. They factor this into the odds to help ensure they make a profit.
For example, if you back a football team at evens you probably think the bookie believes they have a 50/50 chance of winning the game. But that's not actually the case as the vig has been factored into those odds. The bookies probably think there's a 54-55 per cent of that team winning, with the vig acting as a 4-5 per cent commission of sorts.
However, while the vig helps ensure that a bookie makes money, the most important thing when it comes to striking it rich is setting the correct odds.
Pricing the Market
Bookies need to strike a delicate balance between attracting punters with decent odds and avoiding big payouts. One of the reasons why people watch sport is its unpredictability and that's why you sometimes get a 100/1 shot winning the Grand National or a rank outsider like Leicester City romping to victory in the Premier League.
But the expert odds compilers who work for the bookies use statistics and their knowledge of the sport to figure out what the most likely outcome is for any match. Form, injuries and other variables such as weather and the referee are all examined in great detail to determine what the best odds should be.
For example, let's say Liverpool and Leicester City are facing off in the FA Cup Final. Using stats and form, Liverpool would probably be given a 60 per cent of winning, with Leicester at 40. But these would not be the odds given by the bookie as they still need to factor in the vig.
Balancing the Books
Bookies usually try to create a balanced book, which ensures they make a profit no matter the outcome of an event. This usually occurs in events where there is no clear favourite, with the vig ensuring the bookie comes out on top if there's an equal spread of bets across all eventualities.
However, if there is a clear favourite, for example, Manchester United playing at home to Colchester in the FA Cup, it's impossible to create a balanced book. The odds would be heavily slanted towards a United victory and even if Colchester pulled off a shock, only a handful of punters would have bet on such an outcome and the bookie wouldn't take too big a hit.
Keeping an Eye on the Competition
Sports bookmaking is a hugely competitive environment, with a vast number of firms offering bets on almost every event. So when a bookie is setting their odds they need to keep a close eye on the prices of their competitors.
Websites such as this odds comparison site show the prices being offered by each company on a specific event. Bookies will try to tempt customers by offering the most attractive odds but they need to tread carefully to make sure it doesn't affect their profit margin too much.
This is why some of the best odds available are from smaller firms looking to tempt customers away from the big boys but most major firms will generally offer similar odds for each event.