According to a study by the American Gaming Association, 38 million American adults planned to bet on the 2019 NFL season. That’s 15% of the adult population, betting only on professional football. That’s a huge potential client base.
It’s nice to win bets, but the guaranteed money is in bookmaking. Once you see the profits from betting explained, you won’t want to be a gambler anymore. You’ll want to be a bookie.
What Do Bookies Do?
Before looking at how bookmakers, or bookies, get paid, it’s worth considering what bookies do. In other words, why should bookies get paid at all?
A bookie is someone who facilitates gambling. They make it possible for people to place bets by:
- Setting the odds (and sometimes changing them, but more on that later)
- Accepting and placing bets
- Paying out winnings
In popular culture, bookies are often shady figures. There are countless movies where a bookie sends some goons to break some problem gambler’s knees after he can’t pay.
Real bookies are nothing like that, especially now that sports gambling is legal in many places. Even with legal gambling, most bettors still place their wagers with local bookies. If these bookies broke knees, they would quickly lose all their customers.
In reality, a bookie is just a person who makes it possible for you to gamble. Like anyone else who provides a service, they exact a fee for it.
Betting Explained: The Vig
The fee that bookies charge is called the vigorish, or the vig. People also call it the juice, the take, or the margin. Because bookies usually don’t place bets themselves, they make their money from this extra fee they charge on every bet, win or lose.
The place you can see the vig the clearest is in the moneyline for a particular game. Let’s use a football game, Eagles versus Bears, as an example.
Suppose the Eagles are the home team and are the favorite to win the game. The point spread for the game might be Eagles -6.5. That means the Eagles must win by at least seven points for you to win your bet, or to “cover” the spread.
But, the betting line will also include the moneyline. As the favorite, the Eagles are probably sitting at -110. That means if you bet $100, you would only win $90 (in addition to receiving your original bet back). If you wanted to win $100, you’d have to bet $110.
The easiest way to think about the moneyline is the amount you would have to bet to win $100. In this case, that extra $10 is the vig or the fee for the bookie.
There is no standard vig. The most common one is -110 (in other words, an 11 to 10 advantage for the bookmaker), but that varies depending on the game, the teams, and the bookmaker.
The moneyline could even go the other way. If the bookie wanted to encourage more people to bet the Bears, they could set the moneyline at +110. That means for every $100 you bet, you would win $110.
Balancing the Book: Betting Lines Explained
Because bookies make their money from the vig, they want to encourage equal numbers of people to bet on each side of a game.
From our example, they want the same number of people to bet the Eagles and the Bears. The bookie will not have to cover any winning bets himself and can pocket his 10% profit.
With sports gambling, there are two ways a bookie can adjust which side people bet on: shifting the point spread or shifting the moneyline.
Suppose after the bookmaker set the point spread at Eagles -6.5, most people placed their bets on the Eagles. The bookmaker, seeing this, would move the spread to Eagles -7.5 or higher to encourage people to bet the Bears.
Again, the bookmaker wants to get the bets on each side close to even to avoid an unbalanced book.
On the other hand, if the bookmaker did not want to move the spread, he could shift the moneyline down to -120 or -130. Then the payout for winning a bet on the Eagles would be lower (which is the same as having fewer bets).
Bookmakers want a balanced book, so it’s imperative that they set the right line, or adjust it as more bets come in. The volume of bets helps too: the more bets that come in, the more likely the bookie will adjust the line correctly.
Because the line is so important, the biggest bookmakers will have teams of statisticians helping them create and adjust their lines. They also recognize strong, or “sharp”, gamblers and respond to those bets by shifting the lines.
Most neighborhood bookies do not set their own lines. Instead, they rely on bookmaking services or copy lines from larger bookmakers.
What the Vig Means for Gamblers
People placing bets should never lose sight of the vig, especially if they hope to make money over the long term and not just on single bets. It changes the break-even point for betting.
With a -110 Moneyline, each time you lose a bet, you lose $100. But, each time you win, you only win back $90. Your wins are insufficient to cover your losses if you are betting the same amount each time.
In other words, the break-even percentage for winning is no longer 50%. Instead, it’s higher, maybe around 53% or 54% depending on the exact vig. Given bookies set betting lines to encourage equal play on both sides, it’s actually pretty easy to win 50% of your bets.
But, a sports gambler who wins half their bets will soon run out of money. Gamblers must win enough to cover the vig, hopefully with some profit left over.
For the Bookie, It’s Not Really Gambling
The nice part about being the bookie is that so long as you set the right lines, you’re no longer gambling. It’s just math: the winners and losers cancel each other out, and you pocket your fee, every time. That’s betting explained for bookies.
But, just because it’s simple doesn’t mean it’s easy. Otherwise, everyone would do it. Luckily, the right pay-per-head sportsbook service can help you start and grow your sportsbook as an independent bookie.