Betting on sports has gone mainstream. But many, including sportsbook operators and players, don’t know much about how sports betting works. Understanding sports betting means understanding odds creation. So precisely, how do bookies set odds?
Sports betting popularity has increased ever since the U.S. Supreme Court struck down a law that gave Nevada a monopoly on allowing bets on sports. Since then, gambling websites have popped up all over the internet.
Towards the end of 2020, over thirty states have legislation either on the books or in the works legalizing sports wagering. The move towards legalization shows us how mainstream backing teams against the spread or on moneylines has become.
Although some individual sportsbook owners may fear state legalization, we mustn’t forget that sports wagering is a historical U.S. past time. If anything, bookies should increase their profit and revenue by signing up clients who in the past didn’t want to wager on sports because they were afraid of doing something wrong.
Legalization will bring more acceptance. Acceptance lifts all boats, including individual pay per head bookmakers. If you currently run a white label sportsbook that offers free betting software, consider this blog a refresher.
If you’re considering starting a bookmaking operation and want information, this blog is essential. To understand how to run a successful sportsbook, you must first understand how do bookies set odds.
Sportsbook gambling business operators make money via ATS fees
Most everyone knows that bookmakers provide a service. Your sportsbook allows your clients to wager on sports events, casino games, and horse races in a racebook, but you don’t run a team in any sports event.
You don’t own the virtual slot machines or tables. You don’t own the racetrack that runs the horse races. Your ownership is in providing bookie software platforms that allow your clients to make bets on various wagering options.
Because you run a service-based business, you make most of your money on service fees. In the sports betting world, we call those fees “juice”.
Below is an example.
- Las Vegas -6 (-105)
- Los Angeles +6 (-120)
The above wager between Las Vegas and Los Angeles says that for every $100 bet on Las Vegas, the bookie makes 5% in fees. For every $100 bet on Los Angeles, the bookmaker pockets $20 in fees.
If a player bets $300 on Las Vegas, the fees associated are $15. If a different player bets $300 on Los Angeles, the sportsbook operator charges amounts to $60.
Juice, in most cases, is 10%, which means you are charging 10% on every against the spread wager that a player makes. 10% is a massive fee for providing a service.
How do bookies set odds? In a way that ensures a balance on both sides
All companies that offer services want to do one thing; keep as much of the fees they charge as possible. Sportsbooks are no different.
With against the spread wagers, your goal is to balance action on both sides. Our pph sportsbook agents use their layoff account to accomplish this. If you run a smaller book, make sure not to overuse your layoff account.
Take risks where appropriate. Sometimes, it’s wise to let betting money on one side of a spread ride without balancing the action.
Other gambling types you offer require a different point-of-view
The fee-based principle for running a profitable sportsbook only applies to against the spread wagers. Per head agents don’t charge fees on moneyline, racebook, or casino bets.
PayPerHead.com provides sportsbook software tools for bookies to handle any bet type. It doesn’t matter if it’s a wager in the live dealer casino, the digital casino, the racebook, or if it’s a future or moneyline sports bet. When you become a PayPerHead agent, you have tools that allow you to manage money on all bet types.
- Moneyline / future sports bets – Use your layoff account or take risky bets off the board. Also, set max betting limits and max payouts for all moneyline and future sports bets like who wins the Super Bowl.
- Horse racing wagers – Set max payout and max betting limits on all horse races. Horse races offer higher odds than any other betting options you provide.
- Some agents turn on their racebook for Triple Crown races, the Kentucky Derby, Preakness, Belmont, and the Breeders’ Cup. The racebook remains closed for the rest of the year.
- Casino bets – Use player management tools to set max betting and max payout limits. When you add a Premium Casino and Premium Live Dealer, you decide which platform, the standard or the prime, you want your players to access.
So that you know, the Premium Casino and Premium Live Dealer are more attractive and encourage more betting and longer wagering sessions. Many of our agents have shown an up to 15% revenue rise after adding premium platforms.
Provide top gambling software at a reduced rate
Now that you know how bookies set odds, there’s another thing you must know. You require a way to pay players and for players to pay you. Our Agent Payment Solution (APS) is the only one in the industry that allows for online collections and payments. Your players can even use it to fund their accounts. The APS accepts multiple banking methods, so make sure to check it out.
2020 was difficult for everyone, which is why at PayPerHead we’re offering a $3 per head for $3 promo from when you sign-up until Super Bowl LV on February 7. Contact customer service or sign-up on the site.