Principles of Bookmaking

Bookmaking at it’s core relies on two key concepts – turnover and profit margin. In an ideal world, a bookmaker gets a very large turnover on all sides of an event, can squeeze their book to a very low rate as they are attracting so many bets that their over all profit shoots up, and in turn attract even more customers with their now even more attractive odds.

Profit is Sanity

With low turnover, they either have to put up their margin – which is bad for the odds – or they have to effectively start gambling with the punter, offering similar prices to other bookmakers with larger turnovers, only with the prospect of very heavy losses if the wrong result comes in. It is situations like this that has led the majority of the bookmaking industry to effectively share risk in such situations, allowing other bookmakers to bet large amounts on any result that may give them a bad loss on a given day, which although costing them some profit due to the other bookmakers odds, staves off the potential for ruin if the wrong horse comes in.

Bookmakers Balancing Act

Just like any futures market, bookmaking is a delicate balancing act between offering odds with the biggest return for them, but also ones good enough that attract enough punters to retain the high and even turnover needed to balance the books, and it is this endless game of cat and mouse that the bookmaker/client relationship runs on.