How do bookmakers make money?

In the wake of the term "the house always wins", many people always wonder why it is so difficult to beat the bookies – the ones who create the odds/quotes. That's because bookmakers always end up winning. As we get deeper into the subject, we'll introduce a few concepts that will help us better understand how bookmakers make money.

First, a brief observation: for a better understanding of how bookmakers work, it is also essential to know your market better globally. https://bookmakers.com.br/, for example, are among the best betting platforms available today, standing out for their reputation, ability to bet in the player's local currency and data security.

Let us now go to the concepts.

Vigo, vigorish/overround concepts

Also known as Juice or Edge, this concept revolves around how bookmakers start by setting their profit margin. The odds that will be set by them later on various results will incorporate this commission. As we will see later, it is this margin that will allow bookmakers, or brokers, to make money.

To explain this further, we will use the example of a coin toss that represents a possible 50/50 result. For each coin spin, there is a 50% chance of tails and another 50% chance of heads. If a bookmaker followed this assumption and offered correct odds for heads or tails, we would expect it to offer money at the same percentage (equal odds). That's 2.00 in decimal odds and 1/1 in fractional odds. But this is not always the case.

Instead, they always provide an odds of less than 2.0 – say 1.98 for both outcomes – as this would guarantee a profit for the bookmaker on either outcome (heads or tails).

If our bookmaker were offering correct odds on heads or tails, it would mean that every successful result after a $100 bet would result in $200, which is double the original bet. But what if the house has 100 customers, all making $100 bets on heads or tails, 50 of them betting on the outcome of heads and the other 50 on the tails?

If the result was “heads”, it would mean that the 50 who bet “tails” would have lost a jackpot of R$5,000. But then the bookmakers would use the same money to pay the winners. That would be in addition to returning the initial $5000 they bet, bringing the total to $10,000. If you are following, you will notice that the bookmaker has not made a single coin in the entire transaction.

But what about the other scenario, where the house used odds less than 1.98 on any of the results? This would mean that the winners would receive a jackpot of R$5,000 as their starting bet and an additional R$4,900 as a profit. This is because $5,000 x 1.98 (odd) equals $9,900. The remaining $100 would be the profit made by the bookmaker. This is regardless of whether bettors lose or win on their bets.

Thus, bookmakers make money by calculating the probability of each game and then subtracting the margin. This gives rise to the new odd (1.98 in the case of our scenario).

Final considerations

Beating the bookies is always every player's dream, but as discussed earlier, it's not that easy. Instead, you should focus more on winning, as bookmakers will make money anyway.

Always research which bookmakers offer the best odds, bet on “low edge” markets and, whenever possible, use various betting sites.