The Sports Betting Series: Part 3 – The Bookmaker’s Edge

This episode explains how bookmakers are guaranteed to make a profit. Many sports betters are under the impression that they are playing ‘against’ the bookmaker. Either they win or you win. This is simply not true.

Firstly, there are so many people betting on all the possible outcomes. Secondly, the odds that bookmakers offer are “priced up” so that regardless of the outcome, they will make a margin. In other words, the sum of the implied probability on all outcomes is more than the sum of the true probability on all outcomes. If this sounds confusing, this episode is here to help.

This episode also discusses how bookmakers’ models are supported by a huge amount of historical data and enormous computing power, so they can adjust their spreads in real-time or refuse bets if betting is leaning too heavily toward one outcome.

Finally, I believe it is essential to understand that because they make a decent margin on all the events that can be bet on, just like the casinos, they are seeking scale above all else. I hope you enjoy this episode!