How Do Sportsbooks Make Money

Whether you want to become a bookie or you just want to know how they make money, by the end of this guide, you’ll have a thorough understanding. Believe me; the life of a bookie isn’t always glamorous.

If you’re new to sports betting, you may assume you can bet $100 to win $100 on any team to win, but that’s now how it works. The bookies set lines to ensure a profit and that means charging a commission or vig.

Let’s say we have two even teams or we’re betting on a point spread market. Rather than being able to bet $100 to win $100, you need to bet $110 to win $100 on either team. Why do you need to risk more than you win?

Well, that’s the vig and that’s how a bookie can guarantee he or she is making money. A betting market is never priced at 100%, it’s always over and the amount over 100% is how much vig the bookie is taking, which varies.

On a point spread bet, most bookies offer a standard $.20 line (-110/-110), which provides a 4.7% margin for the bookmaker. It’s not that simple though, what happens if everyone bets one team?

Well, let’s say you have $5500 on the Patriots -3.5 and zero on the opponent at +3.5 points. If the Patriots win, the bookie would need to pay out $5000 on the $5500 in bets, which is a big hit to small bookmakers.

What are your options? Well, you need to layoff the Patriots elsewhere. Bookies often layoff big bets with the Asian bookies or betting exchanges because they offer low vig and high enough betting limits.

In an ideal world, the bookie will move his lines to attract as close to 50/50 action as possible. The betting lines don’t resemble the chances of each team winning, but are based on the action the bookie is taking.

Bookies should also offer as many alternative markets and props as possible, as they have a higher margin. In most cases, handicappers are advised to avoid these markets unless there is a price discrepancy.

However, they can be big profit makers for bookmakers with margins of above 20%+ in some cases. Just keep the limits fairly low initially and make sure you collar (limit) anyone consistently beating those markets.

One of the big money makers for a bookie once they have enough customers is a casino. Nearly every online bookie has a casino and the house edge on a lot of those games is higher than margins on sports.

As you can see, bookies make money by adding vig or a commission to markets and guaranteeing they make a small percentage. With that being said, running a successful bookie is a numbers and volume game.

The more action you have coming in, the more money you’re going to make, as long as you balance the book and maintain a healthy margin. Be sure to also read our guides on how to start a bookie.