Understanding Bookmaker OperationsWhen it comes to gamblers, you’ll basically come across two kinds in your sports betting endeavour – first kind that hopes to win, and the other that actually plans to win. Understanding the workings behind a bookmaker’s operations, you can easily calculate your overall profits and returns in the long term, and consequently convert your losses into tangible wins. Let’s use the example of a coin toss to understand how bookmakers work.
The essence behind understanding the working of bookmakers lies in understanding where exactly you should place a bet. Majority of newbie sports bettors make this mistake as they have no clue about how bookmakers work!
Bookmakers basically earn a profit for themselves by pricing up the betting markets. As a result, the odds offered by them are not actually a true representation of the statistical probability of the corresponding events.
To give you an example, statistically speaking, a coin toss has a 50/50 chance of either outcome – tails or heads. It means 2.0 in terms of decimal odds. Now, if you bet £ 10 on either possibility, you stand to win £ 10, thus making it a 100% market.
When we talk about bookmakers, they are in the business of creating markets which go well above 100%, in order to create an edge for themselves, which is how they earn money. In the coin toss example that were discussed above, a bookmaker would normally offer odds lower than 2.0 on the possibility of tails or heads. It implies that you would need to bet more amount of money in order to win £ 10. So, if the offered odds were 1.91, you’d need to bet £ 11 in order to win £ 10. The market percentage in this case would be 104.7%, and hence the bookmakers margin would be 4.7%.
How a regular bookmaker may work?
A select group of punter-centric bookmakers price two-way markets, for instance any of the 5 major European Football leagues, to only around 102%. It implies that they provide far better football odds than the conventional bookmakers, which can charge margins as high as in the vicinity of 110%.
If we use the above provided coin toss example, we’ll need to win somewhere around 53% of all the bets in order to break even with the conventional bookmakers. However, if you were to place a bet at a punter-centric bookmaker, for instance Bet365, Pinnacle etc. on their 102% markets, you’d need to win only around 51% in order to break even.
The 2% figure may not seem to be a lot initially, however, if we look over a medium to long-term time period, this difference can turn out to be huge, providing you the best chance of winning more amount of money in the long term.
It is clearly evident that variations in the bookmaker margins can significantly impact a sports bettor’s profit over an entire season. This is why having a good understanding of margins is so crucial in the field of sports betting!