Many who are interested in getting involved in the business side of the sports betting industry want to know how to become a bookie. As is the case with all forms of business involving the gambling sector, there’s more to becoming a bookie than meets the eye. It’s also important to know the difference between being an online bookie and running an online sportsbook, because the two are not one in the same. In this article, we’ll explore the basics of becoming a bookmaker, how bookmakers make money, and the business options open to bookies, to help you determine if this is the path you’d like to take.
What is a Bookie?
A bookie, better known as a bookmaker, is someone who takes bets from people who wish to wager on sports and other public events, and sets agreed-upon betting odds on these events before accepting wagers. The term bookmaker stems from the time when the person taking the bets and making the lines actually recorded this information in a physical notebook to keep track of bettors.
Think of a bookmaker kind of like a stock broker. A stock broker takes money from their clients to buy and trade stocks. A bookmaker takes money from their customers to bet on sports. Bookies accept and pay off bets on sporting and other events at odds they’ve previously set. Beyond taking a bettor’s wager, bookies can also lend bettors money.
In short, a bookmaker provides sports betting services and offers bettors a place where they can make wagers on sports. The goal of a bookie is to maintain balance in their books to ensure that there is an equal number of bettors who win and lose.
Is there a difference between a bookie and a sportsbook?
Although the terms bookmaker and sportsbook are often used interchangeably, there is a notable distinction between them.
A sportsbook is an onshore or offshore betting establishment – a corporation – that
accepts wagers on sporting and other events based on agreed-upon odds.
Sportsbooks often run promotions.
Vs.
A bookmaker is typically an individual who runs an onshore betting business and
accepts wagers on sporting and other events based on agreed-upon odds.
Bookies may also issue a line of credit to bettors.
Fundamentally speaking, the main difference between a sportsbook and a bookmaker is a sportsbook is a corporation and a bookmaker is an individual. While sometimes they function as two separate entities, nowadays, they tend to work together in the same organization. In fact, the reason the words are often used interchangeably – especially in the world of online sports betting – is that many individuals who want to be a bookmaker often launch an online sports betting operation. In other words, a sportsbook site.
Still, this doesn’t mean you can’t be an independent online bookie, especially with the help of a Pay Per Head (PPH) software platform, which we will discuss a little later on. However, ultimately, whether it’s an individual or an organization, bookmakers and sportsbooks function under the same principle: They take wagers and pay off bets on sporting and other events at agreed-upon odds.
Should you become a bookie?
Before learning how to be a bookie, you need to decide if it is even something worth pursuing. For starters, you need to know what it takes to become a bookmaker. A bookie is someone who:
- Understands sports betting and knows how to make a wager
- Know how the industry works and/or is willing to learn
- Is passionate about sports and stays up-to-date on the latest news and trends
- Is good with numbers
- Is comfortable with taking risks
- Is organized and prepared to create and follow a strategy
- Has some start up cash to cover their overhead
- Is prepared to work a lot, including weekends and holidays
- Is prepared to go through the proper channels to obtain the necessary sportsbook operation licenses, etc. to run a legal bookie business
Knowing how to become a bookie also means knowing how to set your lines. Setting good lines is vital to your success. You can either choose to set the lines yourself or you can copy set lines from another knowledgeable bookmaker. The latter option is often the best choice, unless you’re a professional with years of experience.
Everything mentioned aside, as is the case for any successful long term gambling operation, the two most important factors of becoming a bookie is having money and legitimacy.
How to Make Money Sports Betting as a Bookie
There are different ways that you can turn a profit as a bookmaker. That being said, it is important to understand that the actual sports betting part of being a bookie has nothing to do with making a profit. How do sportsbooks make money? Bookmakers generate profit from service fees.
The betting service a bookie provides – allowing bettors to make wagers – earns the bookie a commission. Therefore, the profit is the result of the fees a bookie charges a bettor and not the actual wagers a bettor makes.
How much should you charge?
Part of running a sportsbook is figuring out how big of a commission (also known as vigorish, vig, or juice) to charge. The amount to charge usually depends on the sport or event. That being said, a 100% – 110% ratio is the most common. A high vig typically means getting profit quicker and can also help to protect your business from losses up to a certain point.
For example, a bookmaker makes money by taking a percentage of every dollar wagered (e.g. 10%). When a bettor wagers $100 on Team A to cover the spread against Team B, the bookmaker takes their 10% fee ($10), for providing the wagering service. If the bettor wins their wager, the bookie will pay out $190. If the bettor loses their wager, the bookie keeps the $100.
The importance of a layoff account
One of the ways a bookie can protect their profit is with a layoff account. This type of tool helps bookmakers to make consistent profit. The account balances out an action on either side of the game.
The reason that bookies tend to find it helpful is that sometimes they can find themselves in an extremely unbalanced situation where a loss on a bet could have significant impact on their cash flow. If this occurs, the bookie can use a similar amount – a layoff account – to offset losses.
Many bookmakers like to use layoff accounts because it can be useful in helping them to run their sportsbook business effectively. With this type of account, they can earn profit without having to take big risks. Keeping the books balanced is also useful to bookmakers who are going through a tough period as they’re saving on cash.
With all that said, it’s important to know that a layoff account isn’t an individual house account, it is a business tool. It is often included as part of the features offered by sports betting software and included in a sportsbook management package.
Understanding the bookmaker bankroll
Whether it’s a corporation or an individual, all sportsbook businesses need to have sufficient cash flow to cover their overhead, everything from rent, utilities, payroll, etc. The main obligation of a bookie is to make payouts on winning wagers as well as pay for the sportsbook software they’re using.
On the most basic level, a bookie collects on losing wagers and then uses this money to make payouts on wagers that win. This means a bookmaker bankroll is any money that exists outside of the money that flows from winning and losing bets. As such, when first starting out as a bookmaker, you will need to have start-up funds. The amount you need for your bankroll depends on how aggressively you want to attract players and on what type of players you want to service.
For instance, casual bettors will not bet as much as pro bettors. Therefore, a staring bankroll of about $5,000 should typically be enough to provide a service to a handful of casual players. However, you won’t want to open up shop with less than $10,000 if your targeting pro players.
When all is said and done, the bigger you can make your bankroll, the better position your business will be in to compete as an online bookmaker and stay afloat during rough patches. Having a layoff account is useful but it shouldn’t be relied upon for survival. To protect your business against unforeseen issues that could disrupt or close your business, put as much money into your bookmaker bankroll as you can prior to launching your services.
To issue credit or not to issue credit
A major dilemma bookies face is whether or not they should issue a line of credit to their customers. Credit is issued on the assumption that the bettor will pay you back on losing wagers. Issuing credit is a huge risk because players do not always pay their gambling debts, or they do pay but not as quickly as you like. This can lead to major business losses.
While its obvious to see why issuing credit isn’t necessarily a great idea for your business, alternatively, not issuing credit puts you at risk of losing players to offshore sportsbooks instead of placing wagers through your local sportsbook. The reason is that if bettors can only play with the money they deposit and there is no credit option, they may feel that there is less of a risk going through an offshore sportsbook than with an independent bookie. Issuing credit is one of the reasons a bettor may choose a bookmaker agent over a big-name sportsbook site.
The following are some aspects to think about if you’re planning to issue credit, but you are debating whether or not to offer a certain bettor a line of credit:
- Can they afford to pay the debt?
- Does the person have a good history of paying back their debts?
- Is there any reason why you might suspect this person might try to commit fraud?
- If you choose not to offer a line of credit, what other strategy can you employ to encourage them to continue returning to you for sports betting?
If you do decide to issue credit, it is highly advisable that you use tools offered by sportsbook software companies that can help you manage this service.
Overall, when it comes to profits in the bookmaking business, the bottom line is that the greater the number of bets or volume of wagers you write, the more money you make. Your goal as a bookie will be to add what you think are solid players to your business. This isn’t only so you can expand your business, but also so you can replace bad customers (those with bad debt or who have been worn down by the house edge) with ones that actually benefit your operation.
How to Get into Sports Betting as an Online Bookie
Beyond having enough knowledge to understand how to become a bookie, and having the dedication and money to make a realistic go of it, you also need the necessary software and licenses to be able to legitimately run your sports betting business and provide the services you want.
If you would like to break into the online sports betting industry, you first need to know how to start an online sports betting business. This requires (but is not limited to):
- A business strategy
- Selecting a target market
- Choosing a reliable software provider
- Creating a website
- Choosing products and services
- Obtaining a license
- Integrating payment processing
- Marketing strategies
Click to learn more about how to start a sports betting business.
Choose your software service provider
In terms of obtaining software for your sports betting business, essentially you have two options. You can either obtain a sports betting platform from a sportsbook software platform provider, or you can obtain the service of an offshore pay per head sportsbook services software provider.
Sports betting software platform
If you would like to start an onshore or offshore sports betting business with the help of a sports betting platform provider, your best options are to either choose a sportsbook white label solution or a sportsbook turnkey solution.
A white label solution for iGaming businesses is where everything you need to launch and operate a sportsbook is provided to you, from the platform, license, betting products and payment processing to customer support, security and back office tools. White labels are fast to launch and are a cost-effective way to start a business.
However, if you’d prefer a more hands-on approach where you have more control over the design and operation of your business, a sportsbook sportsbook turnkey platform may be the more ideal option. Regardless of the option you choose, it is important to pick a platform provider that will satisfy your business’ and customers’ needs.
The following are some things to keep in mind when looking for a bookmaker platform:
- A large variety of sports, eSports, other events, and products (e.g. virtual sports, fantasy sports, etc.)
- Regulatory compliant products and systems
- Localization support (e.g. multi-lingual platform, multiple currency support, specific sports or leagues popular with your local target market, etc.)
- Industry-standard or above security systems
- Variety of payment methods (e.g. credit cards, debit cards, eWallets, etc.)
- Reliable, responsible and professional customer support
- User-friendly user interface
- Multi-platform capabilities (mobile is a must)
- Risk management tools
- CRM
- Marketing systems and tools
- Convenient betting features (e.g. cashout, live streaming, etc.)
- Responsible gambling tools
Check out our sports betting platform provider reviews to find some of the industry’s top suppliers of reputable sportsbook software.
Pay per head sportsbook software
A pay per head sportsbook software provider, also known as price per head, is a post-up offshore online sportsbook or bookmaker service that provides a private onshore bookmaker with an online-based automated sports betting software system. The PPH sportsbook software plays an anonymous role in providing this system.
The pay per head software option works well for bookmakers who wish to run their own independent private business and offer sports betting services to specific local betting clients. By aligning with a pay per head site, the bookie has a shot at competing against the bigger commercial offshore sportsbooks that run their own online sports betting platforms (e.g. William Hill, Bet365, Ladbrokes, Coral, etc.) A PPH service lets bookies operate 24 hours a day, all year long.
The pay per head service provider collects a modest weekly fee for each active bettor connected to the private bookmaker service. They charge a small user fee no matter a bookie’s betting volume or weekly wins and losses, which helps to make it an affordable option.
As a PPH betting customer, you are assigned a username and password so you can access the online betting portal. In addition to your online betting account, you are also provided convenient access to the price per head site’s in-house customer support, which allows for the process of placing sports wagers via telephone.
Although there are many notable similarities across pay per head sports betting software solutions, it is also possible to customize a PPH plan.
The following are some of the PPH customization benefits bookies can enjoy:
- Working directly with an in-house IT staff
- Upgrading their business presence with a website that is designed and maintained to particular specifications
- Customizing a personal daily and weekly betting board
- Total control over the betting lines, odds, and other available offered options
- Access to actual on-time reports to view outcomes, wins, losses, and perceived risk
- Expanded betting options for horse racing and casino games
- Racebook that shows tracks throughout the country and across the globe
- Traceable betting and payouts
In essence, pay per head solutions provide independent bookies with a comprehensive system that enables them to use the most effective business tools to operate and manage their business on an ongoing basis. As such, if your goal is to be a private onshore bookmaker, PPH software services can be an asset for your business operations.
Conclusion
As you can see, knowing how to become a bookie is only half the battle of starting a successful online bookmaker business. If you want to be an independent bookmaker agent, you need to be prepared to have sufficient money to start your business, know what it takes to run a legitimate operation, understand the many risks involved, be ready for stiff competition, and be committed to long working hours and delivering exceptional service.
If this sounds like the type of challenge you’re looking for and/or if you’re interested in exploring white label bookie software options, Casinnovate can help you get in touch with the right partner.
