• Between them they absolutely dominate the betting industry, taking the largest share of profits each year. With the gambling industry being worth in excess of £14 billion a year, even a small slice of that pie is a decent chunk of money.
• A lot of people believe that sports betting sites only depend on the unexpected outcome of matchesto make a profit e.g. A team in position 1 losing to the last team on the table. However, this assumption.

1. Best Online Betting Sites
2. How Do Betting Sites Make Money

Betting exchanges; Of course, both make money from losing bets but they also have different ways to make money. Bookmakers make their money by charging bettors a fee for using their. In short: Keep as much money as possible from free bets. Matched betting is the.

Have you ever wondered how gambling sites make money?

Most people understand that a gambling site makes money if bettors lose their wagers. But if punters win, then the betting site loses… Or do they?

Many believe that online gambling sites either win or lose just like the players who use them. However, that is not the case. These gambling sites are like any other business. They exist to generate a profit.

Let’s take a closer look at how gambling sites make money.

Best Online Betting Sites

The Vig

The main source of money for gambling sites is the vigorish or the “vig.” The vig is commission collected by the site on losing bets.

One of the most common betting odds is -110. This means that you have to bet $110 to win $100. If the gambling sites get equal money on either side of the contest, then they are sure to get a profit.

For example, if an online gaming site gets a $110,000 bet on the home team and another $110,000 bet on the visiting team, it has a total handle of $220,000. If the home team wins, the gambling site will pay out $100,000 to those who bet for the home team plus return their $110,000 bets. The bookmaker still has $10,000 left ($220,000 – $210,000). That’s the vig or the gambling site’s profit.

Imagine the volume of bets made on a single game or event. According to Statista, the online gambling market was valued at $45.8 billion in 2017 and is anticipated to grow to $94 billion in 2024. Now, that’s a lot of figures to make money on.

Balanced Books

In an ideal world, the top online gambling sites would love to see balanced action on both sides of each market. If there’s an equal amount of money wagered on the two sides, they will collect the vig outright. The sample above best explains this.

However, this doesn’t always happen. There are many instances where the betting action is heavy on one side and there’s little to no movement on the other. If this happens, these gambling sites try to shift the betting action to the other side by sweetening the odds for the side that needs action.

For instance, if the betting action is heavy on Team A, it will reduce its odds to discourage betting. On the other hand, if action is slow on Team B, the gambling sites will increase the odds so that bettors are tempted to bet on Team B.

There’s no guarantee that the books will be balanced at the end of the betting period. However, on the hour of reckoning, the books are always tilted to the side where the gambling sites make money.

The Sharps

In the world of online gambling, there are two kinds of gamblers – the squares and the sharps. Now, let’s discuss the two.

The squares are those who bet for recreation. They’re casual bettors. This group is composed of a majority of bettors, hence, they’re labeled as the betting “public.” On the other hand, the sharps are the wise-guys of the industry. These are professional bettors who have years of gambling experience under their belt.

Online gambling sites know who the sharps are by their record because they bet big and win big as well. When these sharps start betting heavily on one side, gambling sites will often adjust their odds to discourage the betting public from following those big bets. Again, this is another way to balance the books.

In case you haven’t noticed, betting sites have wagering limits. These were put in place to minimize the house’s losses against sharp bettors. With these sharps neutralized, gambling sites can make more money and stay in business.

Since the explosive success of sports betting sites in Kenya, quite a number of similar sports betting sites have been recently launched to take advantage of the current gambling craze. My quick estimates show that there are more than 20 similar websites registered and operating locally. Suffice it to say that online gambling is one of the most profitable e-Businesses. William Hill, the biggest sports betting company, generated a revenue of $2.5billion in 2014. But, how do they make money?

Key terms to understand first.

How Do Betting Sites Make Money

1. Bookie/Bookmaker – The person who takes the wages on sporting events e.g. Sportpesa
2. Odds/Lines – Usually presented in decimal points (1.80) or as a fraction (UK format) to show the potential winnings against a stake.
3. Stake – The total amount placed
4. Linemaker/Odd compiler/Sports risk analyst – The person(s) who determine the initial odds.
5. Probability – is a type of ratio where we attempt to predict how many times an outcome can occur compared to all possible outcomes.
6. Better – The gambler placing the bets
7. Off the Board – A game that the bookie is not accepting bets on.

A lot of people believe that sports betting sites only depend on the unexpected outcome of matchesto make a profit e.g. A team in position 1 losing to the last team on the table. However, this assumption is mostly untrue and all bets will often guarantee the bookie a profit irrespective of the result. Just like in a casino where the games are skewed to ensure the house always wins, sports betting sites use simple mathematics to ensure their success in the longrun.

Some bookies usually reduce their liability, by placing opposing bets with other bookmakers. For example, Elitebet Kenya might notice that a week’s matches have very high lines, and a majority of their users have placed bets on the favorites, in a bid to minimize losses they will place opposing bets with Sportpesa especially when they are offering higher odds. Every major sports betting company has a group of analysts called odd compilers or risk analysts who determine the actual probability of the three outcomes (winA, Draw, WinB) of a match occurring by factoring in the following:

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• Form of both teams
• Form of key players and injuries
• Referee
• Home crowd advantage
• Outcome of past matches between the teams etc.

Let us use a hypothetical match between Manchester United and Arsenal FC at Old Trafford. As a linemaker I can comfortably make the following predictions.

How did I come up with these odds?

Man Utd has the home and referee advantage, and historically win more matches against Arsenal; however, their current form is very poor and they are missing key players. On the other hand, Arsenal FC are on a winning streak, Ozil is playing exceptionally well, but they have too many injuries and tend to lose too many crucial matches at this time in the season. This totals to about 100% and in a ‘perfect market’ if the bookie offers these odds they are bound to break even (make as much money as they are losing i.e. zero profit or loss) in the long run.

However, this is a business and they have to skew the odds in their favor. Bookies usually lower the betting odds depending on their target profit margin. With a profit margin that is ~10% the total odds offered by the bookie should be close to:

These odds do not add up to 100%, and this is where the sports betting sites primarily make their profit. With a 10% profit margin, the bookie expects to make about Sh10 profit for every Sh100 bet placed. However, the initial odds offered by bookies are wildly inaccurate and they are adjusted throughout the period before the match to account for competitor activity and the bets placed by other users, which is why it is advisable to bet early.

In our hypothetical match the odds are bound to change in favor of the team receiving the least bets. In this case, Arsenal will be the user favorite due to their current season form and their odd will drop to about 1.7 while that of Man Utd will increase to 2.9/3.0. However, keep in mind that people often bet on the favorites e.g Arsenal, Chelsea, Manchester United and the most money is made when they fail to perform, and judging by the current season the Bookies must be raking in millions.