How Do Betting Sites Make Money?

By: Anna

Posted: February 27, 2023

Updated: February 27, 2023

How do bookmakers determine odds?
How to become a bookie?
How do betting sites make money?

Like any other company, betting sites want to make as much profit as possible while minimizing losses. In this article, we will see how they determine the odds for various events, how much money bookies make a year, and learn about bonuses and promotions. Check out how betting sites make money!

Deciding the Odds

Have you ever wondered who decides the betting odds? Well, they are called the odds compilers. Bookmakers employ these people whose work is essential for betting platforms. While in the past, it was enough to know well a specific sport, today, they have to consider a lot of factors. For instance, they must pay attention to the performance of the particular teams, players, etc., and how they play in home games or their injuries. These examples are only a small slice of all the factors, so this is not the kind of profession they can trust a computer to calculate with various algorithms. The human perspective is essential. How could a program determine the odds of the best player, who has to miss a few games for some reason? There is no way those could make up a realistic number. Odds compilers also have to analyze the financial risks of each bet, compare their odds with other bookmakers and adjust theirs to them.

However, there can’t be too much of a difference since the bettors also aim to maximize profit, so if they find a better offer on a different site, they will bet there. We also recommend bettors check out multiple betting sites for this exact reason. Plus, without odds compilers, there would be no odds to place bets on, so that is why their work is crucial for bookmakers. However, they are humans who make mistakes sometimes like any of us. Check out how to spot the most common bookmakers' mistakes!

How do Betting Sites Make Money?

You have probably already seen that the odds are constantly changing. While one starts to rapidly decrease, the other starts to increase. Why is that? One of the tasks of a bookmaker, including the odds compilers, is to ensure that a bet gains popularity. More specifically, for all outcomes to become popular. The odds should seem compelling enough that bettors choose them. So, deciding the odds based on statistics and logic is only part of the process. Small factors move the odds up or down. Let’s see an example! There are several things to consider during a football match between PSG and a less-known team. Since PSG is a famous team with football stars and many advertisements, despite the stats, people tend to listen to their emotions and place bets on the more popular team. Unconsciously, we get the impulse to choose them; it’s human nature. That is also something bookmakers turn to their benefit.

This is a crucial factor because some of the sports bettors, although they want to remain rational, often listen to their emotions, and since PSG is known and liked by many people in the world, they will automatically bet on their victory. On the other hand, the balance is tipped in favor of PSG because they really are the favorites of the match. So they will aim for the league title, while the other is fighting against relegation. Bookies have to balance the odds, so they make a profit even if the majority wins their bet.

Which Victory Makes the Bookmaker Happier?

How do betting sites make money? Let's stick with our previous soccer example! No matter how much the odds compilers try to balance the given odds, it is almost impossible to do this 100%. Many more people will bet on PDG than the other team. If the weaker team wins, the betting site has to pay out much higher odds, but since far fewer bettors bet on them, the profit will most likely be higher for them. Here is another example: In the Premier League, it was an immense surprise that Leicester City won the championship in the 2015/2016 season. Of course, at the beginning of the season, bettors could bet on who would win the Premier League matches almost at all bookmakers. Back then, the bookies paid 5000 times the money for Leicester's victory, so they did not believe the small team could end up winning the championship.

You can imagine that not many people bet on this with a smaller or larger amount. On the other hand, plenty of people placed bets on Manchester United, Chealse, Liverpool, or Arsenal winning the tournament, so the betting sites made a nice sum. Overall, they did much better than if one of the big teams had won. Don’t forget that sports betting and gambling can exist because of this balance.

How do Betting Sites Make Money? - Promotions and Bonuses

Why do different online bookmakers keep launching promotions and bonuses? Each bonus costs a bookmaker a lot of money, but it usually pays off because they can attract lots of new clients. In general, they impose conditions that are possible to do, but many of the bettors won’t complete them. This is the balance, which is the essence of the entire industry. There will be those who get the offer and win, but there will also be those who cannot fulfill the given conditions. Since the bookmakers look at the bigger picture, even though they invest in promotions, they win in the long run. It brings in a lot of new bettors, and if everything is done right, more money is coming in than going out. How do betting sites make money? It's that simple.

An Online Betting Guru

The boss of gambling firm Bet365 earned an annual salary of over £200 million a few years ago, one of the biggest ever paid in the UK. Bet365's highest-paid director, and founder, Denise Coates, made £213.4 million between 2021 and 2022. Coates founded Bet365 Sportsbook online betting site more than two decades ago. She is considered one of the richest women in the UK and one of the highest-paid bosses in the world. Denise Coates already worked in the gambling industry as a child when she was a cashier at his father's bookmaker office. Coates' father had a football stadium catering business and ran a couple of bookies to complement this. After graduating from Sheffield University with a degree in econometrics, she returned to her hometown in Stoke and worked as an accountant for the company. It was primarily thanks to her that the family-owned Provincial Racing bookmaker chain soon had 50 stores. It was around this time that Coates persuaded his father to take out a loan for the bookmaker and set up its online business. In 2001 she and her younger brother bought the Bet365 domain name on eBay for $25,000 and set up a mobile office in the Potteries' car park.

By 2005, the online direction proved to be a good decision, and Bet365 sold its entire land-based business to Coral for £40 million. Today, it has become one of the most well-known and successful online bookmakers. Until the beginning of 2022, the business generated a total profit of £2.9 billion, 2% more than the previous year. While sales from sports betting declined, online gaming increased by 25% over a year. According to online sportsbook sites in the UK, the company donated around 100 million pounds to charity through the Denise Coates Foundation last year.

Become a Bookmaker Too!

Nowadays, peer-to-peer or P2P services are becoming more and more popular, where the odds of a given event are not determined by the bookmaker but by a fellow player or ourselves. Think of it like the stock market. Some people buy shares, and some people sell them, which is a similar situation. We distinguish Back and Lay positions. The Back role is when you are the bettor, where you bet on something. In the other case, Lay, you are the one who bets against something. This can be beneficial because there are no predetermined odds; the players call the shots here. You can also try betting on a particular event at higher odds, and if there is a partner in this, you can go ahead.