How Do Bookies Make Money?

You’re interested in becoming a bookie to make money, right?

Well, that means you need to understand how bookies make money. We’re not gamblers, we simply facilitate gambling. We allow anyone to place a bet and we’ll lay that action.

While we facilitate sports betting, we also expect to make money as bookies.

You can think of it like being a stockbroker. They’ll place the trades for you, but they expect to be paid a commission for facilitating the trade, which is just like being a bookie.

Coin Flip Example

To make sure all students understand this topic, we’re going to use the simplest example.

Imagine you have 20 players betting on a coin flip.

Ten players bet $100 on heads ($1000 total) and then ten players bet $100 on tails ($1000 total).

If you gave those players true odds of even money (+100), you wouldn’t make anything.

Why is that? Well, if the coin lands on heads, you’re paying out $2000 in total to the players that bet on heads, if the coin lands on tails, you’re paying $2000 to those players.

Since you only took in $2000 of bet, you simply breakeven for facilitating these bets.

What’s the point of doing that?

So, the way bookies make money is by charging a commission (vigorish or vig).

Using the coin flip example, the bookie would charge a commission on every bet. Instead of offering true off (+100), the bookies would juice both sides by making heads (-110) and tails (-110).

Now every player needs to bet $110 to win $100. You would take in a total of $2200 of wagers now.

You’d take in ten bets of $110 on heads and ten bets of $110 on tails. Regardless of the result, you’d payout $2100, which means you pocket a guaranteed $100 from this market.

Volume, Volume, Volume!

The coin flip market above is a perfect situation for a bookie, don’t expect that too often.

The reason is because you’re not going to get even action on every market. It’s just not possible. One thing bookies will do when they have too much exposure is use a layoff account.

However, the layoff account is only ideal when your risk is way higher than average.

If a player bets $100 on a game, you don’t want to lay off that action. The key to making money as a bookie is to generate as much volume as possible from your betting sheet.

Bookies would rather have a player make one hundred bets of $25 per week than ten bets of $250.

Players are going to go on runs and have streaks (hot and cold). The more volume your players generate, the more likely they are to regress to the average win percentage.

Restrict Long-Term Winners (Sharps)

Since you’re not going to have balanced action as a small bookmaker, it’s important that you utilize pay per head (PPH) reports to identify players that are consistently beating you.

If a player is beating the closing line when betting with you, restrict them. These players are going to beat you long-term and they’re only going to hurt your overall hold percentage.

For those unaware, your overall hold percentage is the amount you keep from your action as profits and is the most important statistic to look at when analyzing your PPH bookie reports.

You’ll learn more in-depth information about PPH reporting features in other lessons, but analyzing the reports and making adjustments can make the difference between making and losing money.