With the very broad arsenal of tools bookmakers possess, they are able to give themselves a clear mathematical advantage over 99 % of bettors out there, enabling them to make a very, very big amount of money, day after day. In this article we will explain how. Hereby, we distinguish European (soft) bookmakers and Asian (sharp) bookmakers. But first the Asian bookmakers like Pinnacle and SBOBET (and sometimes betting exchanges).

They have very high limits and don´t restrict their players.

However, they still make a tremendous profit despite the most popular options for betting on their site. Such as asian handicaps and amount of goals. These types of betting mathematically reduces the risk and gives you a chance of winning of, more or less, 50%.

Bookmakers’ profit margin

Bookmakers

We use the word ‘about’ because it’s not exactly 50%, and this is where their way of profiting comes in. Instead of the probability of winning and losing being 50/50%, it’s actually more like 52/48% in favor of the bookie. In the case of European bookies, it will be more like 56/44%, which is one of the reasons why we (and every other bettor who is serious enough) favor the Asians so much. In this way, the bookie has an edge over the bettor and will get a steady profit in over the long term. This is also known as bookmakers’ profit margin (vig).

The same principle applies to roulette

Compare it to roulette tables in the casino. When you put your money on red or black you will double your money by winning (just like an odd of 2.00 would). So a fair probability should be 50/50%. But, the chance of winning is smaller than 50% because of the green number zero (European wheels) and sometimes double zero (American wheels). This is also known as the house’s edge. In roulette, this edge is about 2.70% and 5.26% respectively. In sportsbetting, the edge ranges from about 2% (Asians and exchanges) to as blatantly big as 15% (European bookies, often local). Shameless, we know.

Let’s take an example

A simple and realistic example for exposing the respective edge and corresponding unjust odds is a tennis match in which the chances for both players to win are mathemetically equal. So fair odds should be 2.00 for both players, but because of the profit margin, European bookmakers open with odds of 1.83 – 1.83 or 1.85 – 1.85 and Asian bookmakers set their odds at 1.96 for both. As mentioned before, the house (be it the casino or the bookmaker) will make a profit in the long term because the odds are in their and against the player’s favor.  They are able to effectuate this principle and thereby make a profit by accepting the equal amount of bet volume (in money) on all of the outcomes of a certain bet.

Asian (sharp) bookmakers versus European (soft) bookmakers

The Asian bookies achieve this by accepting enough bets to make their odds very efficient. This means that their odds reflecting the probability of a certain outcome really well. Because their odds are very efficient and they have a very high volume, they can afford a lower profit margin. Namely, Asian bookmakers realize a turnover which rises in the billions. On such turnover, a margin of 2% is still very profitable for them. However, the European bookmakers’ odds are not that efficient because of less liquidity. Although their average profit margin is about 15%, they can not realise this on each odd. Because of less liquidity they do not have the knowledge en statistical background over each bet.

Therefore, false odds in favor of the bettor are quite common by European bookies.

And this is why they are accepting bets of long-term losers and refusing bets of long-term winners (like you and us). Obviously, the latter is much less effective because the bookies drastically limit the amount of bettors and thereby drastically limit their own turnover and profit. It is not surprising that the Asians and exchanges are so much more advanced and so far ahead of the soft European ones and keep on increasing their market share whereas the European bookies struggle to stand out from the crowd in the increasingly competitive industry that is betting.

Luckily, every bookmaker makes mistakes

As we mentioned earlier, the main task of each bookmaker and their primary goal is to equalize the number of bets (or better, the volume of money) on all of the outcomes of a certain event for which there are many innovative methods to entice bettors to act exactly how they want them to. Every serious bookmaker tends to equalize the amount of money they will have to pay out for each of the outcomes, although bookmakers never actually succeed entirely with that – it’s easier said than done – , which is the reason for them insisting on parlay and other forms of multiple event betting which is more profitable for them than anything else. The main reason why they do not always succeed with this is because of professional bettors and tipsters who are able to calculate when an odd is wrong and profit from this, which is essentially what Transparent bets does!

One by-product of this is that this kind of manipulating of the odds to equalize volume often leads to overestimating the favorites which then consequently leads to better value in the odds for asian handicaps on underdogs, something we will elaborate on in another article later.