The Let’s Compare Bets blog has had a few requests recently about about how to become a bookmaker. At the Let’s Compare Bets main website we have written about pricing odds. It’s one thing to know some basics about pricing odds and but to become a bookmaker there are some key tips to use. This post looks at the 5 steps to becoming a bookmaker and has taken some snippets found on the price your own odds page at the main site. The price your own odds page examines how bookmakers aspire to have their cake and eat it. You’ll see what I mean.
The 5 steps to becoming your own bookmaker
1. Choose a sport. Start simple. It’s easier to choose a sport with two outcomes win or lose, than it is to start with horse racing which has many making it more difficult to track what’s happening where. Tennis can only end in a win or draw making it a good place to start. Darts, snooker and pool also only have two possible outcomes.
2. Select the favourite. You’ve got Rodger Federer playing Tim Henman. (back in the day when Henman was playing). With the best of respect to Tim Henman it’s obvious the favourite is Federer.
3. Price the favourite. What a bookmaker does is they attempt to work out the most likely probability of the favourite winning. They turn that into odds and then shorten them so that they don’t have to pay out as much if the favourite wins ensuring they can make a profit. Don’t worry, in this example, there was no need to work out the true probability of Federer winning: just go to one of the bookmakers and use their odds as a guide.
4. Price the outsider. The price of the favourite winning should always be joined by the price of the favourite not winning. In this case offering odds on the Henman winning is the same as offering odds on Federer not winning.
5. Balance the betting book. The bookmaker wants to pay out less than the stakes they take on losing selections. The bookmaker doesn’t know how much will be staked on each player. What happens is that they wait and see how much money is staked on each player. By adjusting the odds a real bookmakers can balance their book to ensure a profit. The amateur bookmaker can only control how much money they take on each player.
That’s the theory. What a traditional bookmaker does is balances the book to guarantee a profit, this is called the over round. For a horse race the bookmaker normally looks to make 2% on each of the first 10 runners and then 1% profit on the others. It is very difficult to exactly balance a book on one event. Bookmakers are not concerned about doing this. Rather they are concerned about making sure that all the events they price turn a profit. The amateur bookmaker can attempt to do this as well.
There are various methods to apply to put the theory into practice. That will be a post for another day. Please sign up to our feed so you won’t miss the next update. In the mean time feel free to comment on 5 steps to becoming a bookmaker.