If you want to be a successful bookie, it’s critical to understand proper money management and how finances can make or break your independent sportsbook.
Bookie money management may be one of the most critical aspects to running an independent sportsbook business, and running it in the black. Profits are, of course, the name of the game when it comes to the online gambling industry.
So, you’ve signed up as a PayPerHead pro or you’re looking to do so in the near future. You have your players all lined up and are ready to open shop. But before any bets can be placed, you must first understand the importance of proper bookie money management. While accounting is important when running any business, an online sportsbook sees so much money moving around on a daily basis that budgeting becomes even that much more imperative.
Initially you must make sure the money you are using to fund your sportsbook isn’t money you need. Yes, we all need money, of course, but the capital you use to start your online sportsbook has got to be considered an investment and you must be prepared to risk it. Don’t let your sportsbook bankroll come from a bank account that you rely on to pay bills or anything of the sort. This is also the wrong avenue to dump your kid’s college fund or your retirement savings into; vacation funds sure- knock yourself out.
The first thing to do when preparing your bankroll is to figure out how much you actually need to begin with, a critical, but often overlooked, step.
To be a successful bookie, how much cash do you need to get your sportsbook started?
You must start off with enough capital to cover your losses; this is step one when talking money management for your sportsbook.
Running a sportsbook is a cash-heavy business which sees currency moving back and forth at a particularly high volume. This creates a situation where keeping track of your finances is all the more important, considering that your bankroll will be in flux 24/7. Without proper planning, it’s very easy to catch a losing streak and find yourself out of business before you have time to right the ship.
A good rule of thumb as far as launch capital goes is to ensure you have banked enough to sustain an entire losing month. This doesn’t mean you end the month with a losing record, this means you lose each and every bet for the entire month. This scenario is highly unlikely, but it is best to plan for the worst in situations where budgeting money comes into play. This requires just some simple math to figure out what works best for your specific needs.
The way to go about this is to ensure you enter each and every day with at least 4x the total maximum weekly potential winning that you offer clients. The first step to accomplish this is to set weekly payout limits for your clients, this puts a cap on the amount of potential winnings they are able to play for.
Consider your maximum weekly payouts capped at $1000 for all your players across the board. You are expecting to launch with a stable to 10 players who have agreed to bet under your sportsbook. A quick bit of the old mathematics and we can see that to confidently launch our book, a bankroll of at least $40,000 is recommended. This will protect you from busting your bankroll should you suffer sustained losing weeks and keep the lights on at your online sportsbook. Be sure to remember to adjust your ratios as you gain new clients to your sportsbook, as with the above example just a single new client would raise your launch capital needs to $4,000.
Keeping your books balanced; the layoff account and how to use it.
A great many PayPerHead agents mention to us that one of the biggest reasons for choosing us is the layoff accounts we offer; the layoff account is a powerful tool for any small sportsbook and bookies should understand how to use it before launching their business. While easy to understand, the layoff account can easily be misused.
A layoff account is essentially a separate account in which agents make wagers of their own that offer a level of protection from a losing day.
Let’s take a look at a real-world example of how a layoff account works and how to make it work for you. Say the Green Bay Packers and New England Patriots are playing Monday Night Football for this week. The spread is three points in favor of the Patriots and they are seeing heavy action at your sportsbook right now. This is when you head on over to your layoff account and get to work. Initially, you might think that the way to go is to simply bet on the Packers +3 and call it a day. But that’s not the way to properly utilize your layoff account as recommended by the experts. The real move is to put money on the same side as your clients, that way you can lay off some or all of your action on the Packers that weekend. This, in essence, offers some cushion if things go south for you during a lopsided week.
It needs to be understood that having a totally balanced book is something of a pipe dream that is not likely to happen all the time. The fact is that most games have a clear public betting favorite and you have to expect your clients to follow trends just like the rest of the industry. So, in theory, it would be great to have a fully balanced book and just collect the juice at zero risk to your overhead. Unless you have the time, desire and resources to constantly be laying off bets in the hunt for the perfect balance, booking like this is frankly unrealistic.
Understand that being a bookie is playing the odds just like clients are doing and taking risks is how books make money in the first place. A sportsbook that lays off most or all of its action will never have the earning potential of one that allows a palatable level of imbalance.
PayPerHead agents can utilize wager alerts to inform them of specific action taking place within their sportsbook and react accordingly. This allows for independent bookmakers to efficiently lay off the action they need to and let the rest ride. For example, you can provide a personal phone number or email address which will receive a text or email about games based on custom parameters set by you. You can set alerts based on individual players, specific games or monetary restrictions as you see necessary. Once alerted to said wager, you can easily pivot over to your layoff account and bet accordingly Once you get the hang of this you will be able to layoff bets left and right with little effort.
Remember, as a bookie your job is reliant on consistent revenue, not those jackpot weekends. If you have any hope of staying in the game long enough to create that revenue a healthy bankroll is a must. As an online bookie for PayPerHead it’s important to always be thinking how today’s bets are you to affect your business tomorrow, or next week, or next month. Over the long term, most sports betters end up losing which means the longer you can keep your shop open the more profits you will see rolling in on the regular.
PayPerHead offers the best resources online for sportsbooks and agents starting their business and getting them off the ground running. Be sure to head on over to our promo page to see what current offers are on for the taking. When it comes to quality of service, security and sportsbook features that make your business run smoothly, PayPerHead offers the best rates in the industry, and once in a while you can take advantage of a great promotion. It’s the hands-down best deal going, so why wait?
Join now to take your first steps toward financial freedom and become a PayPerHead pro agent today!
For more information about managing your money as a bookie and other tips and tricks of the trade, visit our FAQ page or check out How to be a Bookie. Finally, account representatives are available to chat live on this page and can answer any questions you have about signing up, layoff accounts or anything else PayPerHead related. You can also call anytime 24/7 to 1-800-605-4767 and talk to a live representative who has all the answers for any question or issue you might have.