What makes the bookmakers profit

The bookmakers have their specialists for determining the odds. They are so called the “odds-makers”, those are people, who in a particular way are analyzing the coming sport events. They are determining the probability of the results to occur, on the basis of which they are setting the rates for the odds. Certainly they are not philanthropists. They are doing it in such way, that some percent of the stakes paid in by the gamblers would remain in the bookmaker`s pockets. Here is how to calculate how big is the bookmakers profit.

Let`s assume that a match will have an odd set:

	1	X	2
Hosts vs Guests	1.60	3.40	5.30

We are calculating, how much the bookmaker will earn:



Z = (0.625 + 0,29 + 0,19) – 1
Z = 1,105 – 1
Z = 0,105 x 100%
Z = 10,5%

The above calculation shows the bookmaker`s profit from the given bids values. To be sure of achieving such result, the bookmaker have to take care of the right proportions of the money taken between different probabilities of the result to occur. Let`s see, what will happen, if the proportion will be equal. Let`s assume, that 30 people will take part in the game, each paying €1 stake. 10 people are betting on the hosts victory, draw – 10 people, guests victory – 10 people.

Table 1
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Result	Odd	Number of players	Stake	Bookmaker's win/loss
Hosts victory	1.60	10	1 zł	30 - 16 = 14
Draw	3.40	10	1 zł	30 - 34 = -4
Guests victory	5.30	10	1 zł	30 - 53 = -23

Following the results form the table 1 we can see that the bookmaker is only earning in case of hosts victory. This is the most probable result, because the odd`s rate is suggesting, that the hosts are a favourite. Also the profit in that case is the highest, because it`s 46.67%. In this case the bookmaker is taking a risk of losing. Therefore he will be striving for a situation , in which he will always achieve the profit. The bookmaker will win in every situation only then, when the proportions of the paid in stakes will be adequate towards the odds. So this is how we can calculate a share of money bet on the hosts victory.



k1 – odd for the hosts victory
kx – odd for the draw
k2 – odd for the guests victory

therefore:



U= 56,5%

Similarly you have to calculate a share for the players betting on a draw and loss. Results are shown in the table 2.

Table 2­
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	Odds	Players percentage	Had bet on	Players winning	Bookmaker's win/loss	Win/loss in percents
Hosts victory	1.60	56,5%	17	27	2,9	10,5%
Draw	3.40	26,5%	8	27	2,9	10,5%
Guests victory	5.30	17%	5	27	2,9	10,5%

In this case the bookmaker won`t be interested in the results at all. No matter of the result, his profit will be the same - €2.9, what makes 10.5% of all stakes bet on this event. This is for him an optimal situation. The only question is, how to persuade the players to such division of the paid in stakes, like in table 2? Suffice, that the bookmakers will be correcting the odds appropriately. If for e.g. the want more people to bet on the hosts victory, they will increase the odd for it.