Last Updated on 09/20/2022
Fact checked by: Mike Goodpaster
Ever wondered, ‘How do sportsbooks make money?’ Then you’re in the right place. Take a look below to see how bookies make money so that you can try and get the upper hand at any sports betting site!
We’ve got this awesome guide that details how the sportsbooks add a margin into their odds to keep things in their favor. Plus even a good betting bonus can be toyed with to favor the sportsbook. So keep reading to make sure that you don’t play into these sportsbooks’ hands!
Ultimately, sportsbooks make their money in lots of different ways. Perhaps the most obvious way is through the betting margin that they include in their odds. We’ll discuss that more below, but it ultimately means that the sportsbook sets the odds so that they don’t lose money regardless of what happens in the sporting encounter.
Beyond this, a good sportsbook will be careful to operate its business smartly to ensure that it stays legal and fair while making sure that things are in its favor. This means that things like welcome bonuses contain wagering conditions that require you to spend more money, and odds boosts are only for the trickier betting markets.
Such actions are always clearly documented by a sportsbook in its terms and conditions. Therefore you can’t criticize a sportsbook for implementing a winning margin or including wagering conditions as it’s part of what it’s allowed to do on its betting platform. The trick is to try and beat these sportsbooks at their own games, and that’s what we’re here to help with.
Sportsbooks are usually seen as making money from imposing a betting margin on the odds that they offer. This margin is also known by a number of other names such as juice, cut, house edge, vig and so on. It ultimately means that the sportsbook adjusts the odds on offer to ensure that it makes a profit regardless of what actually happens in the sporting event.
This is best illustrated with the example of a coin toss. Here you’d expect that there would be a 50/50 probability of the coin landing on heads and this probability would be reflected in odds of -100. However a sportsbook’s margin could alter the odds to -110. This would give the sportsbook an unfair advantage.
The sportsbook will do this to a smaller or greater extent on all of the odds that it serves up for everything from the Super Bowl all the way down to the most niche sport. It’s based on the premise that if enough people bet on the markets as expected, the enclosed margin should balance itself out to give the sportsbook a profit. It doesn’t always work out like this, but it has helped many sports betting brands stay in business for a long time.
You might think that many sportsbook bonuses look too good to be true. This is because they largely are. Behind all of that hype, you’ll find a page of terms and conditions that details all of those things that might cause you to lose your bonus and spend more money than you’d originally meant to.
Such terms and conditions could include things like tight time limits or even some minimum odds requirements that push you way out of your comfort zone. However, it’s those wagering conditions that continue to be the thing that most sports fans get wrong. This is because wagering conditions will usually cause you to spend more money at the betting site and this is yet another way in which a smart sportsbook will make its money.
So far we’ve been focusing on regular sportsbooks where you bet directly against the operator. However, there has recently been the arrival of betting exchanges that give you a chance to back or lay the sports bets put on by other punters.
Such betting exchanges frequently put on more competitive odds as they don’t feature any kind of margin. So how do these betting exchanges make money? Simply through putting on a small commission fee on all winnings made. Once again, this ensures that the sportsbook stays afloat regardless of what happens in the sporting event.
You’ll probably know that online sportsbooks everywhere from New Jersey to Michigan also have some online casino games on the side. Guess what? These are all configured in a similar way to the sports bets on offer.
This is because everything from an online slot game to a game of roulette, will have an in-built house edge. It’s common for most online casino games to have a return to player ratio (RTP) of anywhere between 90-96% meaning that any sportsbook featuring casino games will always have a slight upper hand.
Above all, sportsbooks make their money through nothing but good business sense. Remember that most of the online sportsbooks that you’ll be playing at, are massive multinational corporations. Gone are the days when you used to head to some family owned bookmaker to put down your bets, as sports betting in the US is now big business.
After all, it cost each online sportsbook in New York $25 million to pay the one-off licensing fee for operating in the Empire State. As such, the ability to juggle the odds in their favor will seem like a relatively simple task for these huge sports betting brands.
So we’ve answered the central question of, ‘How do sportsbooks make money?’ Now it’s time to think about how much money these betting sites actually make. So let’s get one thing clear and that’s that sportsbooks do make a lot of money.
Let’s take an example: In 2020, BetMGM managed to make $178 million in net revenue. This was despite sports betting and casino gaming only being legal in a handful of states, and it was in the midst of one of the worst pandemics in decades.
If you think about how sportsbooks like this could thrive once sports betting gets legalized in more states, you’ll see that there’s plenty of money to be made. So don’t feel bad if you manage to get that massive win at an online sportsbook!
We believe that knowledge is power and therefore your betting success rests on a solid understanding of how sportsbooks work. We’re not saying that you have to get too mathematical in figuring out how betting margins work, just realize that this is common practice among all decent sportsbooks.
As such, you’ll get to recognize when some sportsbooks might be getting even more competitive by temporarily lowering their betting margins to offer you some great value odds. This is where we’ll be by your side to alert you to when any online sportsbooks have some betting odds that are just too good to ignore. After all, it might not happen too often, so you’ve got to take advantage of the situation while you can!
By now you shouldn’t have to ask, ‘How do sportsbooks make money?’ as we’ve revealed that these operators make their profits in a variety of ways. The bulk of a sportsbook’s money will come through its clever engineering of the betting odds in its favor. But everything from the bonuses on offer to the casino games featured will be configured in a way to ensure that the sportsbook stays in the black.
It’s important to remind you that this is all legal practice and it’s the only way that sportsbooks are able to stay afloat. Ultimately this is good for you, because you’d have nowhere to bet if all the sportsbooks went under. Thankfully our guide has at least revealed what you can do to be smart when using these betting sites. So sign up to an online sportsbook and see how lucky you can get!
Read our guide to see how bookies make money and learn how much they actually make. We’ll provide you with handy examples from regular sportsbooks and even have a betting exchange explained so that you can see how betting sites skim a profit off the top. All you need to make sure that you put down a well-informed sports bet.
Check out our guide to how bookies make money and how they lose money too. After all, there are so many variables in sports betting and a sportsbook will have to lose sooner or later. Plus even if you’ve read our sportsbook guide, you’ll know that no one can see into the future to put down a guaranteed winning bet!
Make sure that you read our guide that answers the question of, ‘How do sportsbooks make money?’ so that you can see how they get caught in configuring the odds to make sure that they always make a profit. However, if you have bettting odds explained, you may stand a better chance at getting something back from even the smartest online sportsbooks.
There often comes a time when a big sporting upset occurs and the sportsbooks have to pay out a massive win. Read our guide to see how bookies make money despite doing this so that you can tailor your bets accordingly. Plus we can even answer questions like, ‘What is the legal gambling age in the US?’ so that you have everything you need to take on the best betting sites in the US.
If you know the sportsbooks of Vegas, you’ll know that they like to stay on top of their bets. So be sure to read our guide to how bookies make money in Vegas. Not only will we examine how these betting sites operate, but we’ll help answer important questions like, ‘How is a system bet explained?’ so that you’re perfectly equipped for taking on these formidable operators.