Whats the Real Profit on a Bookie Business
The point of any business is to make money, hopefully doing something that is of interest to the owner. Bookmaking is no different, and just like other businesses, it’s important to understand how to make a profit. There are a lot of elements that go into building a profitable business, but How much do Bookies Make?
The bookmaking business model is fairly straightforward, with revenue generated by the wagers of customers. The cost part is rather easy to figure as well, since there is no physical inventory or other more complicated deductions from revenue. For an independent bookmaker, the primary cost is what they pay in winning wagers.
Bookmakers set lines and odds so that if the same amount is wagered on both sides of the bet, the bookie wins regardless of the outcome. For example, one team is a six point favorite in a football game. The odds on the bet on the favorite are set at -110, meaning the bettor has to wager $110 to net $100.
Generally, at least on opening lines, the odds on the underdog are also -110. If the six point line produces about the same amount of wagers on both sides of the bet, all the bookie does is take the wagers from the losers and gives them to the winners.
Assuming they can collect what’s owed them, the profit margin is roughly 10% of the amount wagered on the winning team. If a bookmaker has 100 customers who make $200 in bets a week, the bookie can see a profit of around $1000 a week.
That, of course, is dependent on everything going as described earlier, with roughly equal money on both sides of a wager and successfully getting paid for losing bets. One of the best ways to manage the business is for a bookie to use a Pay Per Head (PPH) service.
PPH software includes an online sportsbook for customers and backend account management functionality for bookmakers. The sportsbook allows the player to make wagers on a wide array of sporting events, with lines initially set by the PPH provider.
The bookie focuses on account development and management, setting betting limits for customers or even using the PPH service to accept up-front payments wagers. The software also allows for customized settings, including changes in lines and odds for particular customers.
The reporting feature of the PPH software provides the bookie with up to the minute information on the amount and status of wagers. It also tracks a bookie’s position on specific games, allowing them the data needed to adjust lines or odds to promote one side of the bet.
The critical part of making a profit as a bookie is to effectively avoid or manage risk. Getting caught with too much money wagered on either side of a bet can put the bookmaker in a risky situation. They can either stay with the position or try to offload some of the risk.
Use of PPH Software
For bookies that use PPH software, there are layoff services provided, where the bets can be “laid off” to the provider, who is able to spread the risk across a larger number of bettors. It cannot be emphasized enough that the bookie’s profit is dependent on staying out of the position of relying on game or event outcomes.
The PPH software can also be used by the bookie to evaluate the events and wagering types that result in the most profitable revenue for them. By knowing where they’re making the most money, they can either find customers that make those types of wagers or incent their current players to move their action in that direction.
If a bookie uses a PPH service to accept payment for wagers as their place, it’s critical that they pay out the winnings immediately after the conclusion of the event. If they choose instead to settle up on a weekly basis, for instance, they will need to make sure of the worthiness of their customers.
Being able to collect from customers is as important to the bookie as mitigating risk on each event. If they can attract reliable players, manage risk and get paid for losing wagers, they can provide an answer to the question of How much do Bookies Make?
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