Choosing where to bet on sports online in the USA is tough. Not all online sportsbooks can be trusted, which is a problem when you’re betting for real money.There are some safe options, though, and we’ve identified the best of them. How do sportsbook sites make money? We explain how bookmakers make money! Do I even have the chance to win? Here is all you need to know👉.

Sports Insights is a leader in providing innovative sports information and betting systems to help its members navigate the sports marketplace. Sports Insights’ founder, Dan Fabrizio, recently came out with a book titled “Sports Investing: Profiting from Point Spreads“, solidifying our position as a leader in the field of sports gambling analysis. Sports Insights focuses on systematic and measurable approaches to capturing value in the sports marketplace. One of the key elements to our approach is our proprietary Betting Percentages, collected from several major online sportsbooks.

How does a business, and more specifically a sportsbook, view profit and revenue? How do they manage risk? How are sportsbook profit margins managed for greatest gain? How can “Betting Percentages” help? At Sports Insights, we often use phrases like “betting percentages” and “smart money.” With this article, the first of a series, SportsInsights will be studying the workings of the sports investing marketplace. In this article, we take a step back and look at what an actual risk manager at a sportsbook might feel. We’ll look at how sportsbooks make lines for games, study how they might shade lines to increase profit margins, and see how public “betting percentages” can help identify value.

In future articles within this series, we’ll take a closer look at why “smart money” and “reverse line movement” are telling indicators — and how they work on a more fundamental level. These articles can help us get a better understanding of why “contrarian investing” works — and how sportsbooks operate. The information on this site is for entertainment and educational purposes only. Use of this information in violation of any federal, state, or local laws is prohibited.

Sportsbooks and Balancing Risk

For point-spread sports, the odds are generally around -105 or -110. For instance, you might be able to bet on the favorite in the NFL such as the New Orleans Saints at -10 at -110 odds, or the favorite in an NBA game such as the Boston Celtics -3 at -105 odds. If you wanted the other side of the bet, you could normally take the underdog for the same point-spread (+10 and +3, respectively), and “receive” the points, instead of “giving” the points. The odds are typically close to even odds, such as -105 or -110 (which means risking $105, or $110, to win $100). Point-spreads — and moneyline odds — are designed to help sportsbooks balance the risk they have on either side of a bet.

Sportsbook Payouts and the 50%/50% Betting Percentage or “Balanced Book”

In this example, a casino or sportsbook has taken in 100 bets of $110 each ($110 to win $100), or a total of $11,000. Fifty percent (50%) of the bets (or 50 bets of $110 each, totaling $5,500) are on the favorite and 50% of the bets are on the underdog.

• The sportsbook knows that if the Favorite wins, they have to pay out $10,500 to the appropriate bettors ($5,500 bet plus $5,000 winnings).
• Similarly, if the Underdog wins, the sportsbook also has to pay out $10,500 — to the appropriate bettors.
• The sportsbook is happy because either way, they have profited — since they collected $11,000 in total and need to pay out just $10,500.

This is fairly ideal for the sportsbook’s risk manager. The bets are evenly balanced so the sportsbook collects the vig with no risk. The sportsbook will collect $500 on $11,000 worth of action, for a profit margin of 4.5%. The sportsbook has a nicely balanced book of business.

Sportsbook Payouts and the “Centered Game”

In addition to trying to balance bettors on either side of a bet, sportsbooks seek to price the odds of each bet so that each sporting event is close to a “centered game,” or a bet whose pricing reflects the actual expected probability of that event to occur. If the bets are priced with the true exact probabilities, bettors will only be able to win 50% of their point-spread bets (and appropriate moneyline winning percentage) — and the sportsbooks will collect the 4.5% profit margin in the long run due to the cushion of the vig. In this example, the actual bets that a sportsbook takes won’t matter in the long-run (because by definition, the proper pricing will prevent bettors from making outsized gains).

Human Nature, Profit Margins, and Shaded Lines

In the examples above, we show perfect scenarios for the sportsbooks. In real-life, it is difficult for the sportsbooks to perfectly balance the risk on every single bet they take. In addition, it is impossible to know the precise odds of any sporting event to perfectly “center the odds.”

However, there is one sure thing that rings true: human nature. Bettors have certain tendencies. For instance, on average, bettors like to take favorites. Sports fans also like “jumping on the bandwagon” and riding the coattails of perennial winners. Sportsbooks can use these biases to shade their lines and increase their profit margins.

We estimated a sportsbook’s expected profit margin based on results over a wide range of events (small favorites, heavy favorites, etc.). We analyzed the expected profit margin when shading a team’s expected probability for covering the spread by 1%, 2%, and 3%. Note how the left column, “Public % on Overpriced Side,” affects the overall profits, when shaded by the different percentages. For the purposes of this table, we assumed all bets are the same size.

Table 1: Expected Profit Margin for Shaded Lines based on Betting Percentages

How Much Money Did Sportsbooks Make

What do the Results Mean?

As you can see in Table 1, above, there is a strong incentive for sportsbooks to shade lines, based on their experience with bettors and human nature. For example, we know that many bettors prefer to bet on favorites. Based on our analysis, if 60-80% of bets are taking the favorite, sportsbooks can improve their profit margins from 4.5% to about 6% by shading their lines 2%! Most games do not get out of whack in terms of public “betting percentages” to 0%/100% — especially in the opposite direction that sportsbooks expect, so there is virtually no risk for the sportsbooks to shade their lines.

And How Can Betting Percentages Help?

Based on research for this article, we can see that when the public “betting percentages” get to extremes, it identifies games that sportsbooks have potentially shaded. For example, the Lakers might be favored by -12 points instead of the -10 that the “centered numbers” dictate. The sportsbooks know that the betting public will lean to the popular teams and heavy favorites. They will make the “Joe Public” “pay more” to take the heavy favorites.

In the most lopsided-bet games, as determined by “betting percentages,” you want to “Bet Against the Public” and take the same side as the long-term winners: the sportsbooks. Betting against the public has proven to be a good contrarian investment for those who seek value in the sports marketplace.

Disclaimer

We do not guarantee that the trends and biases we’ve found will continue to exist. It is impossible to predict the future. Any serious academic research in the field of “market efficiencies” recognizes that inefficiencies may disappear over time. Once inefficiencies are discovered, it is only a matter of time before the market corrects itself. We do not guarantee our data is error-free. However, we’ve tried our best to make sure every score and percentage is correct.

Some people refer to sportsbooks as a sanctuary; a place they can go where they do their best thinking and enjoy the games and atmosphere. Some people refer to them as utter chaos, and other than placing their bets at one, do everything in their power to get out before the games actually start. Whether you are one side of the fence or the other, as long as the sportsbooks have your money tied up with them, they have you right where they want you. For those of you who are new to the betting industry, a sportsbook is often another name for a bookmaker, although this is the more common term in the United Kingdom. A 'bookie' is a single person who accepts bets on sporting events, like a sportsbook is a legal establishment where wagers can be made. Their sole purpose is to make as much money as possible, and oh are they ever doing that.

How Do Sportsbooks Operate?

The simple answer to this question is that the sportsbooks are free to operate however they see fit. Each sportsbook has a different set of rules that constitutes what is considered a winning bet. Some facilities offer your money back when a push occurs against the spread, while some consider that a loss on a parlay ticket. Sportsbooks can also set their own lines and odds and adjust them however much they want in order to avoid a big loss, while still attracting action on both sides of the event. While sportsbooks try to be unique, the similarities between them are obvious. All of them offer up the same types of bets - moneyline , point spread , totals , parlays, teasers, game-specific prop bets, and future bets. However, the juice or vig you will have to pay in order to come out ahead is very different from book to book.

What is Vig?

The main technique bookmakers use to put the odds in their favor is the inclusion of vigorish (aka Vig). It is built into the odds bookmakers set to help them make a profit. In essence, it's a commission charged for laying bets. To best explain vig, let's look at a simple coin flip.

The toss of a coin has two possible outcomes, and each is equally likely. There is a 50 percent chance of heads and a 50 percent chance of tails. If a bookmaker were offering true odds on the toss of a coin, they would offer even money. This is 2.00 in decimal odds, +100 in money line odds, and 1/1 in fractional odds. A successful $10 bet at even money returns $20, which is $10 profit plus the initial stake back.

Let's say a bookmaker had 100 customers all betting $10 on the toss of a coin, with half of them betting on tails and half of them betting on heads. The bookmaker would stand to make no money at all in this scenario.

Now, with the inclusion of vig, a sportsbook is guaranteed to make money regardless of the outcome. When two outcomes are equally likely, it is common for them to use odds of 1.90 (-110 in money line).

Continuing with the coin toss example, the odds-on heads and tails would still both be the same, but they would now be at 1.90. This means that a successful $10 would return a total of $19.09 ($9.09 in profit, plus $10 original stake).

How Much Do Sportsbooks Make

As you can see, the change in odds makes a big difference, and the bookmaker is now making a guaranteed profit on every toss of the coin. The total amount they pay out is always going to be $954.50 against the $1,000 they have received in total wagers. They have found a way to make a profit margin of $45.50 on the vigorish.

This is a very simplified example, but it' just goes to show you how bookmakers set the odds to give them an advantage. Things get a little more complicated when it actually comes to sports events, as the possible outcomes aren't usually equally likely. This is why you have to pay a premium on point spread lines that land on key numbers. Sportsbooks are simply protecting their bottom line and doing everything in their power to make sure the action is equal on both sides.

Most Popular Sportsbooks

Since very few places recognize gambling as being legal, the most popular sportsbooks are in Las Vegas, Nevada. This is the betting capital of the world, and during events like the NFL playoffs or March Madness it is incredibly hard to find a seat in these facilities to enjoy the games. Tourists from outside of Nevada flock to Sin City in hopes of turning a couple bucks into much more. If you ask 10 people which sportsbook their favorite is, they will likely all tell you a different answer. Some of the more notable 'sportsbooks' in Las Vegas include Westgate, Caesar's Palace and the MGM Mirage.

In today's day and age, online sportsbooks are becoming more and more prominent. These are sportsbooks that have a physical location outside of the United States but accept clients from all over the world. These kinds of sportsbooks are also referred to as an offshore book. The concept is basically the same as a normal sportsbook except everything is done online with a few clicks of your mouse or taps of your fingers on your phone. Some of the more popular online sportsbooks are 5Dimes, Bovada and Bookmaker.

How to Choose the Best Sportsbook For You

In order to get the best bang for your buck while betting on sports, you must shop around and find the best lines. This is money-management 101, but you'd be surprised at how many bettors have only one sportsbook to wager with. As I mentioned, sportsbooks are free to set the odds however they see fit, which means some will have better odds than others. The Chicago Cubs may be -180 at one book and -190 at another. The difference of .10 cents won't break your bankroll right on the spot, but it adds up down the line.

If you like to play parlays, find a book that offers good returns for a winning parlay bet. Some books offer a percentage on top of your winnings depending on how many teams are in that parlay. If you are a big point spread player, some sportsbooks offer up lines higher or lower (depending on what side you're playing) than other sportsbooks and some sportsbooks have a points rewards system. If you look hard enough you will find something that fits your style of play.

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