what are bookmakers
We hope you’re sitting down, because you’re probably not going to believe what we’re about to tell you. Well, here it goes; a long, long time ago, there once was a time when sports betting existed without bookmakers. Yes, it’s true. When people first started betting on sports, they just made wagers with other individuals. Bettors would agree on the terms of a wager between themselves, and then settle up once the relevant event was over. Although this would occasionally cause a dispute, this process still worked well most the time.
Of course, people still bet this way today. People often make sports wagers with friends, colleagues or family members. Most sports betting these days is done more formally though, with a recognized bookmaker. It’s been this way for hundreds of years, and it’s unlikely to change any time soon.
The term bookmaker was not actually used until the 19th century. The role had existed for a long time by then though, and bookmaking had already become an integral part of sports betting. All over the world there were individuals, groups and organizations who were willing to accept wagers from anyone wishing to bet on a sporting event.
Over the years, the sports betting industry has grown significantly. It’s been estimated that the global sports betting market is now worth up to $3 trillion if including illegal gambling. The legal and regulated market is worth billions of dollars on its own, so that figure is not too hard to believe.
Regardless of what the actual numbers are, it’s safe to say that the sports betting industry is HUGE. There are literally thousands of bookmaking operations in existence. Some of these operations are small, and just take wagers from a select number of private clients. Some of them are massive operations though, servicing millions of customers on a global scale. The role of a bookmaker is fundamentally the same regardless of the size of the operation.
Actually, the role of the very first bookmakers and the role of bookmakers today is not too different either. The most significant change is a result of the internet. Many bookmakers operate online now, running betting sites where their customers can place wagers without any human interaction.
The basics are still very similar though. Online bookmakers still open betting markets on sports events, offering odds on the various potential outcomes. They still take wagers from their customers, and pay out the winners. There are just a few extra things that are expected of them now.
In this article we take a look at the role of the modern online bookmaker in more detail. We focus primarily on the way they set their odds and lines, as this is something we need to understand. We then look at some of the additional aspects of their role, such as processing payments and advertising their websites.
How Bookmakers Set Odds & Lines In Order to Make Money
Most bookmaking firms hire a team of odds compilers. They are responsible for setting the odds and lines, and are known for being extremely intelligent. Although they do use advanced software to help them, they still have to know a lot about the sports that they cover, and it would be helpful if they were mathematically inclined too.
Odds compilers are influenced by several factors as they price their opening odds and lines. Below we have listed the four most important factors.
- Their own outlook
- Profit margin
- Likely betting activity
- Competitor’s odds and lines
What Is a Bookie?
The term bookie is short or slang for "bookmaker." A bookie is someone who facilitates gambling, most commonly on sporting events. A bookie sets odds, accepts, and places bets, and pays out winnings on behalf of other people.
- The term bookie is short or slang for "bookmaker." A bookie is someone who facilitates gambling, most commonly on sporting events. A bookie sets odds, accepts, and places bets, and pays out winnings on behalf of other people.
- The bookie's goal is to maintain balance in the books by adjusting the odds as much as possible so that there's an even amount of people betting on a win or loss.
- The 2018 U.S. Supreme Court ruling opened the door for sports betting throughout the country if states decide in favor of it.
Bookies do not usually make their money by placing bets themselves, but by charging a transaction fee on their customers' bets known as a "vigorish," or "the vig." Bookies may also lend money to bettors. A bookie can be an individual or an organization.
Although the term bookie has been associated with illegal activity, with the expansion of sports betting, a bookmaker has become more legitimate. However, bookmaking and placing bets through a bookmaker can also be illegal, but the legality of different types of gambling is largely determined by state governments.
With the expansion of sports betting in various states, bookies are likely to see increases in betting activity, while states are expected to generate additional revenues.
Early on, sports betting had only been legal in Delaware, Montana, Nevada, and Oregon. As a result, a black market developed for the rest of the country whereby illegal operations of bookies provided sports betting. While some bookies are involved in organized crime, others operate independently, simply taking bets for a few friends, family members, or colleagues.
However, in 2018, the U.S. Supreme Court ruled against the Professional and Amateur Sports Protection Act, which was a federal law preventing states from deciding on their own whether to allow sports betting. The ruling opened the door for sports betting throughout the country if states decide in favor of it. As a result, bookmakers are likely to see an increase in business in the coming years.
The casino operators like MGM Resorts are also looking to cash in on sports betting with its partnership with MLB as the official gaming partner of the sport. Other companies and bookies are likely to expand into social media including Facebook to access potential betting customers.
Bookies and Setting the Odds
One of the most critical ways bookies ensure their winnings is by calculating the odds that they will win an event, sometimes by employing teams of statisticians and developing complex models. The terms lines (“money lines”) and spreads (“point spreads”) are critical factors for bookies. Sometimes these calculations are based on those, developed by casino actuaries or those who deal with risk calculations.
Typically, they underscore which sports team the bookies believe will win an event. The lines and spreads can be adjusted, leading up to a game or match, based on various bets made in their books, along with fluctuations in Vegas casino bets. Other unexpected events might impact the odds such as poor weather, player injuries, and doping scandals.
The bookie's goal is to maintain balance in the books by adjusting the odds as much as possible so that there's an even amount of people betting on a win or loss. If the book is balanced, the bookie earns the transaction fees. However, if there's a one-sided bet on a particular team or outcome, the bookie has an increased risk of losing money.
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