How Do Sports Betting Companies Make Money? Busting the Myths!

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Betting on sporting activities has been a long-aged practice that can be traced to as far back as the era of gladiators in the early Roman Empire over 2000 years ago. You would agree that the intent of every bettor towards every game wagered on is to win and earn reasonable cash for every Rupee staked. While everyone desires to hit big through the bookies, there are times when our predictions fall out of line, and we lose money.

The advent of online sports wagering has made it easier for sports enthusiasts across India to place wagers on their favorite sports. It’s no surprise that bookmakers receive a high volume of stakes every year on major cricket games – being the sport with the highest popularity in the country. Football, hockey, horse racing, and kabaddi are also sports of high sensation. You can click here to learn about popular sports events, leagues, and tournaments in India.

According to a research study, Indian gamers spent $1.73 billion (₹13,000 crores) on online sports betting alone in 2022. This study also shows that the market revenue will reach $4 billion (₹30,000 crores) by 2024. Access to the internet and smartphones is a huge influence behind these staggering figures. Many sports fanatics wager on games based on their kin interest. Also, the activity serves as a way to enjoy their loved games and get rewarded for their passion.

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The global online sports wagering industry is expanding rapidly due to the worldwide growth of digitalization and legalization of the sector in some major countries. Although India has suffered some setbacks due to legalization, access to the internet and affordability of mobile devices has given tons of users access to offshore betting platforms that are not classified as illegal by Indian gambling laws.

Covid-19 mandatory lockdowns and closure of workplaces also gave a significant boost to the growth of this industry. In pursuit of stable finances, 40% of Indian internet users are involved in sports wagering activities to make money from the comfort of their homes.

Since every bettor is after making chunks of money and gaining massive ROI from the system, the big question is how then do bookies make money – despite the high daily and weekly payouts? Contrary to the general opinion that sportsbooks make money by cheating and defrauding their customers, these companies have tangible and fair methods by which they make huge profits without running at a loss from massive payouts to bettors.

In this article, we will bust some myths on how bookmakers make money while revealing actual ways by which they profit.

Myth 1: Punters bet against bookies

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Sportsbooks don’t make money by wagering against the punters as they only provide a platform for people to wager and are not involved in the actual betting. The primary way they make money is by charging a commission on every sports wager they take. The commission is called ‘vigorish’ – also known as ‘the vig’ or ‘juice’ – which helps bookies balance the margin between the amount of money of wagers and payouts in their favor. This business strategy ensures that bookies get more money in more than they payout.

Bookies are into the business to make money and are not non-profit organizations; therefore, it is only fair if they charge a minimum amount for providing people the opportunity to win big – hence, the Vig. Here is how vigorish works; if a punter wagers on two odds: $100 to win $200, they have to wager $110 with $10 being the vigorish, i.e., a $100 bet would result in a $190 payout.

Myth 2: Bookmakers have inside information

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It’s safe to say that sportsbooks spend a lot of effort in compiling the news and data for every match compared to bettors who have less time to do so. As such, it may look as though sportsbooks have access to inside information, which is totally false. These companies can get faster and more accurate information because they also employ the services of experts known as odds compilers who study stats in-depth before coming up with odds for various games and tournaments.

Licensed and legit bookmakers are just like every other person regarding information about matches and competitions – they don’t have any more edge over an average punter concerning the outcome of any game. All they do to ensure they profit is ensure equal bets on both sides while setting a favorable margin. Come to think of it, if bookies try to trick people into betting on a ‘losing team,’ but it ends up being the winner, chances are they will run out of business quickly.

Myth 3: Bookies only profit from bettors’ losses

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Since sportsbooks rely majorly on the vigorish as their profit, they are often not seriously concerned with who wins or loses their wager. Thus, the myth that they only get money from punters’ losses is false. Odds compilers make sure that the odds presented are adjusted to give profit margin to the betting companies – allowing them to make profits regardless of a match’s outcome. Also, with the aid of a balanced book, the risk of losing money on the part of these companies is reduced to virtually zero.

Always know that no matter which team or player wins or loses, bookies are bound to make money in the long run. However, choosing a trustworthy and credible bookmaker in your sports betting journey is still essential.

Conclusion

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It is now clear that bookies have a mathematical advantage over their customers by carefully setting their odds after extensive research and calculations. Although these companies don’t always win massive amounts of money on every single market, this advantage helps them make money and profit in the long run.

However, this mathematical advantage can be beaten by bettors who take time to research games and develop basic strategies that give them a better chance of winning most of their wagers.