Have you ever wondered how gambling sites make money?
Most people understand that a gambling site makes money if bettors lose their wagers. But if punters win, then the betting site loses… Or do they?
Many believe that online gambling sites either win or lose just like the players who use them. However, that is not the case. These gambling sites are like any other business. They exist to generate a profit.
Let’s take a closer look at how gambling sites make money.
The main source of money for gambling sites is the vigorish or the “vig.” The vig is commission collected by the site on losing bets.
One of the most common betting odds is -110. This means that you have to bet $110 to win $100. If the gambling sites get equal money on either side of the contest, then they are sure to get a profit.
For example, if an online gaming site gets a $110,000 bet on the home team and another $110,000 bet on the visiting team, it has a total handle of $220,000. If the home team wins, the gambling site will pay out $100,000 to those who bet for the home team plus return their $110,000 bets. The bookmaker still has $10,000 left ($220,000 – $210,000). That’s the vig or the gambling site’s profit.
Imagine the volume of bets made on a single game or event. According to Statista, the online gambling market was valued at $45.8 billion in 2017 and is anticipated to grow to $94 billion in 2024. Now, that’s a lot of figures to make money on.
In an ideal world, the top online gambling sites would love to see balanced action on both sides of each market. If there’s an equal amount of money wagered on the two sides, they will collect the vig outright. The sample above best explains this.
However, this doesn’t always happen. There are many instances where the betting action is heavy on one side and there’s little to no movement on the other. If this happens, these gambling sites try to shift the betting action to the other side by sweetening the odds for the side that needs action.
For instance, if the betting action is heavy on Team A, it will reduce its odds to discourage betting. On the other hand, if action is slow on Team B, the gambling sites will increase the odds so that bettors are tempted to bet on Team B.
There’s no guarantee that the books will be balanced at the end of the betting period. However, on the hour of reckoning, the books are always tilted to the side where the gambling sites make money.
In the world of online gambling, there are two kinds of gamblers – the squares and the sharps. Now, let’s discuss the two.
The squares are those who bet for recreation. They’re casual bettors. This group is composed of a majority of bettors, hence, they’re labeled as the betting “public.” On the other hand, the sharps are the wise-guys of the industry. These are professional bettors who have years of gambling experience under their belt.
Online gambling sites know who the sharps are by their record because they bet big and win big as well. When these sharps start betting heavily on one side, gambling sites will often adjust their odds to discourage the betting public from following those big bets. Again, this is another way to balance the books.
In case you haven’t noticed, betting sites have wagering limits. These were put in place to minimize the house’s losses against sharp bettors. With these sharps neutralized, gambling sites can make more money and stay in business.