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Understanding How Bookmakers Work
In simple terms, online bookmakers make a profit by pricing their online betting markets so that the odds offered do not fairly represent the actual statistical probability of the event concerned. The simplest analogy is betting on a coin toss, which statistically represents a 50/50 chance (even money or 1/1) on either outcome – heads or tails. When betting with a friend, you’d bet €10 to win €10.
Most online bookmakers however, would offer heads or tails at odds below 1/1, so you would for example have to bet €11 to win €10 (10/11) on what is essentially an equal chance. If one player bets €11 to win €10 on heads and another player bets €11 to win €10 on tails, the bookie takes in €22 in bets but regardless of whether the outcome is heads or tails, he will pay out only €21 (€10 in winnings and return the player’s stake amount of €11). The difference between the odds they offer, and the true price represents the bookmakers margin, in this case a €1 profit or 4.5% on turnover. |
