How do Sports Betting Companies Make Money?

How Do Sports Betting Companies Make Money?

While sports betting is an avenue for people to make money, it wouldn’t function if the sportsbooks that take on the bets weren’t making money themselves. Most people don’t ever consider how and why sports betting companies are so profitable, but learning about that process may help you make smarter bets.

Sports Betting Companies: Balanced Books

Balancing the books is a concentrated effort by sportsbooks to get enough action on both sides of a bet to ensure that they profit regardless of the outcome. Action is another term for the number of bets taken. If a book isn’t balanced, sportsbooks are at risk of not making money or even ending up losing money.

When a book is balanced, the only way that sports betting companies do not profit is on the occasions when a push occurs, because everyone gets their stake returned for a push.

Lines are carefully set so that when one side gets overwhelmingly more action, the odds ensure that either side would end up being profitable for the company. Working to keep the books balanced is one of the main ways sports betting companies make sure that they get their cut.

Rarely does a book end up perfectly balanced, but the aim is to make it as close to perfectly balanced as possible.

The Best Sports Betting Companies

Flutter

Not only is flutter a huge company, but they also operate in multiple countries in control of some of the biggest names around. FanDuel, Betfair, and PokerStars are among the many brands under their domain that you may have heard of.

Kindred Group

Another of the biggest sports betting companies, Kindred Group exploded in 2018 due to exposure during the World Cup. They entered the American sports betting and casino landscape through deals with two New Jersey casinos.

William Hill

If you are in the US or the UK, William Hill is a name you’ve probably stumbled upon before countless times. They have a massive share of online gambling revenue and are steadily expanding every day.

How Bookmakers Make Money: Explained

The main goal of a bookmaker is to receive more money in bets than they end up having to pay in winnings. They have several strategies they can use to attain this.

One of them is balancing the book, which was discussed above. Another way is manipulating the lines, setting them in a way that gets people to make bad bets. Preying on bettors that use their desires or bettors who are ignorant are staples of a bookmakers’ strategy.

Because bookmakers can make the lines whatever they want, they can constantly change them based on the information they have to guarantee that they turn a profit regardless of the outcome of a particular bet.

Spread Betting Basics in Sports Betting

Betting against the spread is one of the most popular ways to bet, and also one of the most profitable avenues of betting for sports betting companies.

Spread betting eliminates the advantage that the favorite team has in the game, so theoretically it puts the two opponents on an equal footing. So a team favored to win will have to win by a certain amount of points to win against the spread. If they win the game by less than the designated amount, they are a losing bet.

The spread works for sports betting companies because they usually see roughly equal action on both sides of the spread, meaning they almost always turn a profit on spread betting.

The Spread Revenue in Sports Betting

The spread becomes profitable because usually both sides are even, and the wager amount is greater than the payout. So, if both sides are -110, that means that you must bet $110 to win $100.

If the sides are even like the companies aim to make it, and both sides see equal action, they theoretically will always profit. The amount being put in, the $110, is greater than the $100 that they are paying out. So if the sides see equal action, companies in that scenario will make $10 for every $110 bet on each side, no matter which side wins.

The A Book and The B Book in Sports Betting: Explained

Companies tend to have their clients categorized internally depending on how they are with money.

Those who frequently lose bets and make the sportsbook money, will be placed in the B Book. These are bettors who typically make the sportsbooks money, so bets that they back are bets that the sportsbook figure will lose. It’s not anything marked on your account or anything, just a method of tracking data and betting trends.

That makes A Book bettors the bettors that sportsbooks will try to limit losses from. While they can also provide profits for the sports betting companies, they are much more of a risk to make money off. They track how they bet and find ways to limit the damage these bettors can do to their profit margins.

The Regulatory Environment in Sports Betting

Sports betting companies, and frankly all legal gambling entities, are heavily regulated by the US federal government and respective state governments. They are subject to taxes, fees, and operating standards.

These regulations are stiff and ensure that sports betting companies can’t treat you unfairly. The federal government and states were meticulous in crafting the laws, rules, and regulations that sports betting companies must abide by. If they fail to comply, they are subject to heavy fines and other punishments.

When you are using a legal American sportsbook, you know that they have a strict operational code to adhere to. Offshore sportsbooks don’t have to comply with these same regulations, meaning they have much more power over your account.

This is why it’s strongly advised to avoid offshore sportsbooks. They can essentially do what they want with your money and account, including freezing it and withholding withdrawals. The US regulates sports betting heavily so that you can bet comfortably knowing that your money and personal information are legally protected.

How to Find the Right Sportsbook in Sports Betting

Finding the right sportsbook is all about finding the one that suits your betting needs the best. If you love same-game parlays, you may value FanDuel more than PointsBet. If you value frequent odds boosts, then maybe you will prefer PointsBet over BetMGM.

Each sportsbook has different pros and cons. Some companies have more markets, some have better odds. Some have daily promos, while others have quicker withdrawals.

Looking around, reading reviews, and asking friends are all great ways to find the sportsbook that suits you best.

More on Placing Sports Bets

Sports betting, like all betting, is risk assessment first and foremost. Sportsbooks are trying to create lines that are enticing but doomed to fail. They are also trying to create an environment where either side is valid, so your chances are the same as a coin flip, but they profit regardless.

Doing research and having confidence in your bets are great ways to prevent sports betting companies from emptying your pockets. But sports betting is also supposed to be fun, not a job, so don’t feel pressure when you are betting.

Sports Betting: Conclusion

When you are sports betting, you may be putting money on a certain outcome, but you are also playing against the bookmakers at all times. Their job is to turn a profit no matter the outcome, and your job is to spot any mistakes that they may make.

It’s possible to make money in sports betting, but it’s also very easy for sports betting companies to take advantage of you as a bettor. Don’t let them.