How Bookies Make Money

Vigorish or Juice

Vigorish, also known as “juice,” is a small percentage of each bet that bookmakers take as their commission. This fee ensures that bookies make a profit regardless of the outcome of the bet. For example, if you place a $100 bet on an event with even odds (50/50 chance), you would typically win $200 (your original $100 plus $100 in winnings). However, with vigorish, you might only win $190 or $195, depending on the bookmaker’s margin.

This margin means that bettors need to win more than 50% of their bets just to break even. For instance, if the vigorish is 10%, you would need to win at least 55% of your bets to cover the commission and start making a profit. This built-in advantage is how bookies consistently generate revenue.

Setting Odds

Bookmakers set odds based on real probabilities but also include their margin to ensure profitability. These odds reflect not just the likelihood of an event but also public betting patterns. If many people are betting on one side of an event, bookmakers may adjust the odds to attract more bets on the other side, balancing their risk.

For example, if a popular football team is favored to win by a large margin, many bettors will place bets on this team. To manage their risk, bookmakers might lower the payout for betting on this team while increasing it for betting on the underdog. This adjustment helps them balance their books and minimize potential losses.

Hedging Bets

Hedging bets is another strategy bookmakers use to manage risk and potential losses. By adjusting odds or placing counter-bets with other sportsbooks, they can offset potential losses from one side of a bet. For instance, if a bookmaker has taken too many bets on one side of an event and fears significant losses if that side wins, they might hedge by placing bets with other sportsbooks on the opposite outcome.

This practice helps bookies maintain a balanced book and reduces their exposure to large payouts. It’s a sophisticated risk management technique that ensures they remain profitable over time.

Profit Strategies for Bettors

Arbitrage Betting

Arbitrage betting involves exploiting price discrepancies between different sportsbooks to guarantee a profit. Here’s how it works: you place bets on opposite outcomes with different sportsbooks where the odds are such that you win regardless of the result.

For example, if one sportsbook offers odds of 2.10 for Team A to win and another offers odds of 2.20 for Team B to win, you can place bets in such a way that your total winnings exceed your total stake regardless of which team wins. This strategy requires careful calculation and choosing stakes wisely to maximize returns.

Statistical Modeling

Using statistical modeling can give bettors an edge over sportsbooks by analyzing reliable statistics that predict outcomes more accurately than public perception. For instance, tracking a football team’s rushing yards per quarter can help you predict their performance better than relying on general trends or public opinion.

The key is to stay committed to your model over weeks and months, adjusting it based on new data rather than making impulsive decisions based on short-term results. This approach helps you make informed bets that are less influenced by emotional or public biases.

Middling and Middle Arbitrage

Middling involves capitalizing on shifting point spreads or total lines in sports events. If you place bets on both sides of an event at different times when the line moves in your favor, you can win both sides if the outcome falls within a certain range.

For example, if you bet on Team A -7 points at one time and later bet on Team B +9 points when the line moves, you could win both bets if Team A wins by exactly 8 points. While this strategy can be profitable, it also carries risks since it requires precise timing and favorable line movements.

Chasing Steam

“Steam” in sports betting refers to significant movements in the betting market that indicate serious gamblers are placing large bets on one side of an event. Following steam can help bettors make more informed decisions by mimicking these bets.

Monitoring odds on various sites to identify steam movements can be beneficial. However, it’s crucial to understand that steam doesn’t always guarantee a win; it simply indicates where smart money is being placed.

Draw Betting

Betting on draws, particularly in football matches, can offer great value due to public bias towards win/lose outcomes. Many bettors overlook draw bets because they are less glamorous than backing a winner. However, this oversight creates an opportunity for savvy bettors who recognize that draws often have higher paying odds due to lower demand.

By taking advantage of these higher odds, you can increase your potential winnings while exploiting public bias against draw outcomes.

Real-World Applications and Case Studies

Simulated and Real Betting Experiments

Experiments conducted by researchers like Kaunitz and co. have demonstrated the effectiveness of certain betting strategies through simulations and real-world testing using bots to collect odds data. One such experiment resulted in a 9.9% return and a profit of $34,932 across 6,994 bets.

Comparing these results with random betting strategies highlights the effectiveness of using informed methods over mere chance. These experiments provide valuable insights into how systematic approaches can outperform casual betting practices.

Practical Considerations

Implementing these strategies practically requires careful planning and execution. For instance, managing your bankroll effectively is crucial to avoid depleting your funds too quickly or missing betting opportunities due to insufficient capital.

Tips include setting aside a dedicated bankroll for betting, avoiding impulsive decisions based on short-term results, and staying disciplined in following your chosen strategy over time.