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Why Bookmakers Always Win (and Why it Shouldn’t Worry You)

Whilst bookmakers may always win in the long run, skilled sports betters use this fact to their advantage. And by knowing how, you can beat the betting agencies as well!

Gambling on games of chance like roulette, craps, or the lottery are for people that are addicted to gambling, misunderstand odds, or value entertainment over money. The house has an intrinsic edge on all games of chance, and no matter what betting strategy you use, you are going to lose money in the long run.

Bookmakers (almost) always win as well. They are good at what they do- bookmaking is big business for a reason. There are many ways in which bookmakers ensure they make money, but their winning money from the masses shouldn’t mean that you as an individual can’t win. We’ll explain the ways that bookmakers ensure profitability, and why it shouldn’t worry you.

Using Experts

Bookmakers employ experts to set odds on markets. They do this through a combination of experience and probabilistic modelling. The odds they set reflect both the estimated underlying probability of the event, and how they believe punters will bet. For instance, if they believe an event is 50/50, but that punters will overwhelming bet on one team, they will make that team the favourite. By doing this bookmakers aim to position themselves so that they will make money regardless of outcome.

Bookmakers’ odds pricers are not impossible to beat. Sports experts are actually often much better at predicting outcomes than a bookmaker’s pricing team. However, to make money you need to be significantly better that the experts to not only beat them, but also the bookmaker’s margin (also known as the spread) as well.

Why it shouldn’t worry you:

Beating the experts and their bookmaker’s margin, is difficult but not impossible. To maximise your probability, consider the following:

  1. Patriotic Odds: Pay particular attention to markets where one team or player is far more supported than their opponent – national teams from betting nations, better supported club teams, or well-known players are perfect examples of this. Bookmakers set odds to exploit the masses, providing you an opportunity to bet against them.
  2. Information Asymmetry: Focus on events where you have information not known by the general public, such as the debut of a junior player, or where the degree of analysis by bookmakers is limited (as it is with smaller events).
Whilst bookmakers always win in the long run, betting against crowd favourites can be profitable for the individual
Betting against crowd and national favourites can give you an edge

Adjusting Odds

Bookmakers constantly change odds according to how the public bets. The mechanics of this is explained in another article but the main takeaway is that the starting point for odds reflects how bookmakers believe the public will bet, and subsequent adjustments reflect how the public actually bets. Bookmakers adjust markets in this way to ensure that there is a significant amount of action on both sides of the market, in an attempt to guarantee profit regardless of the outcome.

Why it shouldn’t worry you:

Bookmakers are usually better at predicting outcomes than the betting public. Therefore adjustments (that do not have a real cause) are actually likely to cause odds to move away from the underlying probability of the event. This means that you can make money at the expense of the layman punter by betting on the lengthening odds.

Banning Successful Punters

Banning is a very frustrating part of sports betting and some bookmakers are notorious for it. Bookmaker terms and conditions state that they can ban or restrict anyone at will. But when it happens it is little consolation as you are being punished for being successful. The main reasons you might find yourself banned or limited are:

  1. Systematic Betting. This is by far the most annoying as flagrantly it is a ban for being good at sports betting. Many people that try to beat the odds are using a system, whether it is as complicated as a mathematical model or as simple as betting according to the weather, and to be banned for it seems unfair.
  2. Arbitrage Companies will not know (or indeed care) if you are arbitraging by placing counter bets with them and one of their competitors. However you will find yourself banned if you are repeatedly arbitraging by placing counter bets as odds change. This includes arbitraging between sister betting agencies (e.g. Luxbet + Tab or Ladbrokes + Betstar).
  3. Abusing promotional offers. If too high of a proportion of your bets are on promos (where bookmakers lose money), you will soon find yourself banned or at least restricted from betting on bonus offers

Why it shouldn’t worry you:

Whilst it is difficult to avoid being banned for ‘systematic’ betting, you shouldn’t be banned for other reasons as you abide by the terms and conditions of the betting agency. If you do get banned or limited, the beauty of sports betting is you are rewarded for opening new accounts through bonus offers, so you can just open an account with a different bookmaker!

In fact, serious sports bettors will usually have an account with every possible bookmaker so that they can take advantage of the best odds and promotions. Be sure to check out our bookmaker reviews for the best current joining offers promotions!

Payout Limits

All companies limit bet size to some extent, whether it be the amount they will pay out, or the amount you can actually stake. Some bookies even have rules where they will not pay out on excessively high multi odds – but will deceptively let you place the bet regardless.

Limiting the size of the bets ultimately reduces the variability of returns that bookmakers will face on any given market or bet, and will eliminate the cost they will have to bare from an individual punter taking advantage of any misinformation. Also, unlike lotteries, bookmakers will not necessarily have the capital to pay out on inordinately high bets.

Why it shouldn’t worry you:

Be sure to stay on top of how much a bookmaker will pay out or allow you to bet before you actually pace the bet. The only thing more frustrating than depositing money to find you are not allowed to bet it all, is having massive payout reduced because you weren’t aware that there was a payout limit. Each of the detailed bookmaker reviews on our site records the various bet/payout limits for each bookmaker, and once you know them, you can split your bet across multiple bookmakers as appropriate.

Also, if you happen to be a high roller, splitting your bet is especially beneficial as you will essentially became a VIP client with multiple bookmakers. Placing a $10,000 bet with one bookmaker will likely mean you are eligible for their VIP offers such as periodic bonus bets, but placing $5,000 across two bookmakers may mean that you enjoy this same privilege with both bookmakers.

Closing off Positions

Despite using all of the above tools to improve profitability and reduce risk, bookmakers may find on occasion that they are left with an ‘open’ position on a market. In this case the bookmaker hasn’t guaranteed a return but instead may win or lose depending on the outcome.

Bookmakers do not generally view an open position as something that requires any action, as they are confident that their pricing is accurate enough such that in the long run one-sided betting will ‘balance out’. That said, under certain circumstances, such as when loss when the sum of money is substantially large or they have a low level of confidence in their pricing, a bookmaker will sacrifice a small amount of expected profit to ‘close out’ an open position.

To close out a position, bookmakers may choose to use betting exchanges such as Betfair to offset their position. On betting exchanges, bookmakers can choose to either ‘lay’ (i.e. sell bets) on the less bet upon outcome, or ‘back’ (i.e. buy) bets on the more bet upon outcome, to ensure their overall position is balanced.

It may interest people to know that Betfair Australia was actually bought out by Crown in 2014, with one of the reasons speculated as being that Crown can close out open positions without sacrificing any expected return.

Why it shouldn’t worry you:

Bookmakers closing off on exchanges is a win/win for punters and bookmakers alike.

Firstly, bookmakers provide betting exchanges with much needed depth. In fact, given how low yield betting exchanges are (taking less than 5% of the winners’ profit for matched bets) without bookmakers using exchanges they may cease to exist altogether!

Secondly, bookmakers being able to use exchanges means that they bare less overall risk, and can in turn be more confident of their winnings and offer more competitive odds to their customers.

Conclusion

Next time someone says to you that the house always wins, tell them that whilst that may be true, it doesn’t mean you can’t as well. Sports betting should not be thought of as a game of chance, but one of strategy where you’re not betting against the house, but rather paying the house for the privilege of allowing you to bet against other punters.

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