What is a Bookie?

August 9, 2010 - by mosesbet · Filed Under betting articles Comments Off on What is a Bookie? 

How do Bookmakers Work?

Understanding the role the online bookmaker and how they make their money is something all experienced punters should take the time to learn.

What is a Bookmaker/Bookie?

A Bookmaker, also known as a Sportsbook (US) or “Bookie”, is a business which is licensed to broker bets and deals with customers.  By offering odds and market to players, bookmakers earn their money by charging a margin or “juice” so that the odds are slightly worse than the probability of the event happening.  For example, if the probability of Federer winning a major grand slam in 2010 is 5.0, then the bookies will offer slightly reduced odds of 4.9.

Many of the well known high street brands have been operating for over 50 years in the UK.  Although some companies such as Sky began offering online services in the late 1990s, it wasn’t really until 2002 – 2004 that most bookmakers took their products online and the sportsbook industry really kicked off.  Importantly, since Betfair launched it’s online betting exchange in 2000 punters can now set their own odds, lay teams and even choose which fans to bet with, which has removed the traditional job of the bookie out of the equation.

Balancing the Books

If the entire market bets a certain way, then a bookie can end up in a risky position where it stands to lose big if the market wins.  If everyone bets on Man Utd winning and wins then the bookies will obviously lose a lot of money.  A strange phenomenon like this actually happened at the beginning of the 09/10 Premier League season when so many of the favourites were winning that the major bookmakers such as Ladbrokes were in a serious cash flow situation.  It’s also true that because so many England fans bet on England every time the World Cup comes round, that if they actually did win, it would be a worst case scenarios for almost every bookie in the UK.  Ladbrokes have admitted that the best case scenario is for England to get to the final and then lose!

It’s necessary for bookies to do what’s known as “balancing the books”.  The bookie will alter/ reduce to odds to ensure that regardless of the result, the bookie will always make a profit.  The bookmaker would lower the the odds for Man Utd winning (and improve the odds for losing) in the above example so that the market is evenly distributed.

It is up to the bookmaker to set the odds and calculate the risked involved.  I’m not exactly sure who sets the odds in all honesty, and I have no idea how Live-in-Play Betting odds are changed, but they do change none the less.

Bookmaker’s Margins

The margin of UK bookmakers tend to be around 5-20%.  Punters can use various online odds comparison tools to find the best odds for particular events.  In Asian, the Asian Handicap betting system is regarded as supreme to the UK/US’s spread because the margin is about half as much.