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Online sports betting agencies (bookmakers and betting exchanges) provide websites where you can bet on sports.
These websites are fast, powerful and intuitive to use. The thing is their websites have to be at the top of the game as their whole business “is” the website.
Bookmakers - The traditional way
The way bookmakers like Betbubbles.com make their money is not by betting against you - the punter. This is the biggest misconception people have about how bookmakers work.
Instead, the way bookmakers make their money is by trying to make the odds attractive enough so that they get an equal amount of people to bet for and against the sporting event.
Picture an English Premier League game, Manchester United versus Chelsea. What are the betting options here? Well, Man U can win, Chelsea can win, or it could be a draw.
Three possible outcomes right?
The whole aim of the game for a bookmaker is to balance the amount of money they receive from punters on all three outcomes.
If they are successful in balancing the amount of money on all sides, they have effectively managed to make themselves a nice pile of cash regardless of the result... How?
They make their money from the difference between true odds and their set odds. I’ll show you this in an example as it should make it a lot easier to understand.
We’ll use that same example as above. Chelsea is playing at home against Manchester United. The odds may be represented as the true chance of each of the three outcomes occurring might be:
Chelsea at home: 2Draw: 3Man United away: 6
Just a quick note here that the true chance is obviously not spot on correct. It can’t be because the outcome is not known. But what it represents is the closest odds to the event occurring.
Now let’s look at the relative probabilities for each outcome:
Chelsea at home: 50%Draw: 33%Man United away: 17%
I explain the maths behind odds in the next part of this guide.
If you add all the percentages together you will have a total of 100%. This represents a fair book. If bookmakers run fair books, they’re not making any money. Not too good for them I imagine.
If the bookmaker wants to make some money on this bet the odds will need to be reduced, to something like the following:
Chelsea at home: 1.8Draw: 2.8Man United away: 5
We’ll take a look at the relative probabilities again for each outcome:
Chelsea at home: 56%Draw: 36%Man United away: 20%
Now by adding the percentages this time round we have a total of 112%
The amount that is over 100% is known as the overround and it represents the bookmaker’s potential profit if the proportion of bets has been successfully managed on all three outcomes.
Therefore using the bookmaker’s odds, if $112 is wagered in the correct proportion, only $100 will need to be paid out no matter what the results are in the example. How’s that possible?
Home win: A stake of $55.56 at odds of 1.8 returns $100Draw: A stake of $37.71 at odds of 2.8 returns $99.99Away win: A stake of $20 at odds of 5 returns $100
The total incoming amount of money (the stakes) totals $112 and the maximum payout to the winner comes to $100 irrespective of the result.
This leaves a profit to the bookmaker of $12 - this is a 10.7% profit on turnover (12 x 100/112)
The rise of Betting Exchanges
In the last decade a new way of betting has emerged. This way is called betting exchanges and leading the method and technology is Betfair.
In betting exchanges you are betting against other people in which you set your own odds. Betfair take a small commission from customers who win their bets. If you lose you pay no commissions.
Let’s take an AFL game where two teams are playing against each other. In the traditional bookmaker type betting you can bet on Team A winning, Team B winning or a draw.
Betting exchanges give you 5 ways to bet. You can bet in the same way as above, but now you can also bet against an outcome taking place.
An example is that Team A will NOT win. Here’s a table from a betting exchange where it shows all the ways to bet (odds represent betting options)
Team A - Back
Team A - Lay
Team B - Back
Team B - Lay
The bookmaker type of betting looks like this:
Team A - Winner
Team B - Winner
As you can see, betting exchanges make do without bookmakers. Usually in this way of odds are much lower.
Bookmakers or Betting Exchanges?
I recommend that you use both bookmakers and betting exchanges. They both have their own advantages.
You should open up multiple accounts at both agency types for the following reasons:
To compare odds - odds are not the same - they can vary significantly from one sports betting agency to the other
Sports Betting agencies don’t like you winning all the time - If you consistently win, you may raise alarms. To stop this from happening, spread your bets across all your accounts
Special online prescriptions - Some promotions that come around are just too good to skip.