Betting strategy tips – How bookmakers make money from sports betting

Betting strategy tips – How bookmakers make money from sports betting


so everybody likes a little bit of a
flutter now and again your bet on their
favorite sporting event especially when
the Grand National comes around
maybe it’s the colors of the jockey
silks maybe it’s the name of the horse
or some special interest story having a
bet on it adds a little bit of an
interest to that underlying sport but as
we all know bookmakers win in the long
term and that is because they’re looking
for a certain type of customer good
morning Emily good morning placer in
listening to Peter I have yes I have
I’ve been listening but Peter it’s Grand
National Day and everybody ain’t as
clever as you out there the mums and
dads be us but the nannies and the wives
and the children they pick out their
four or five horses and they have their
50 pence each way it’s a fun day Peter
you should be on any day by National Day
only why have you got
yes but on Grand National Day have it on
next week coming with you in the studio
we’ll have a chat said you wants to be a
mug or do you want to be amongst the
clever people bookmakers are great at
getting you to place another bet with
the anticipation of a big win but the
big question is how do bookmakers make
money from your average punter so I’ve
got five coins here these are gonna
represent a betting market basically
think of it as having five selections
within the market and in order to win a
bet against the bookmaker we need to
have when we tossing a coin is random so
you can see here we’ve got heads tails
heads tails across all of the individual
coins and everybody knows if we toss a
coin or spin a coin it will land heads
or tails so what we’re gonna do here is
we’re gonna say if we get three heads
then we will win this particular bet but
if we get three tails then the bookmaker
will win so if we basically go into a
market
we randomized this a little bit to make
sure it’s completely random and then
throw this out you can see here on this
occasion that bookmaker wins because
they’ve got more towns than heads but
what we’re trying to do here is just
randomize a situation but we’re also
trying to represent the market as having
a number of different selections so
we’re saying there are five selections
within a market and we just need to pick
a winning bet out of this maybe we you
know if you do a strategy that involves
back in more than one runner this is a
good proxy but basically we’re just
trying to simulate a market of some sort
where there is a winner and a loser and
a certain number of selections within
that market so on this occasion you can
see it’s mainly tails so the bookmaker
wins and if we repeat this process
enough and over time it will all balance
out there will be an equal number of
winners and losers we will win sometimes
the bookmaker will win sometimes but it
basically levels out over a long period
of time if we whack this into a
spreadsheet and repeat this over many
many thousands of experiments we will
find that we win 50 percent of the time
and the bookmaker wins 50 percent of the
time this is what we would call a fair
market and bookmakers present fair
markets because obviously they have a
market of maybe five selections and they
offer odds on all of those five
selections so again you would expect in
a fair market that you would win an
equal number of times that the bookmaker
wins and therefore everything balances
out so how do bookmakers make money well
what we’re going to do here is I’m going
to do this again but we’re gonna mix
things up and run it over a number of
experiments so here three heads the
punter wins so it’s one nil mr. punter
on this occasion the punter wins again
so it’s to nil mr. Ponte he’s on a good
run maybe he should quit three nil mr.
Ponte is definitely should quit now
maybe he should increase his stakes and
there you go the bookmakers one because
there are five tails so no head so it’s
three one
mr. Punto for one mr. Ponte and you’re
thinking what is he doing here because
surely this is gonna a bridge at now in
time three four – four three – mr.
punter for all mr. punter five four mr.
Fenster five or five six so how how five
seven so how is what I am I doing here
it’s different from what we were doing
before
five eight so can you see over time the
love that we do this the bigger that gap
is getting five nine
510 511 so the punters won five times
the bookmakers won eleven times 5/12 so
can you see over time the more and more
we encourage the punter to play the
bigger the margin is for the book mania
this is how bookmakers work but you’re
sort of thinking well hold on a second
here you’ve got five coins header
they’re completely random and yet the
bookmaker seems to be winning these bets
more frequently than you could possibly
imagine so why is that well if I turn
over these coins you’ll begin to
understand how that was possible so you
can see that one of the coins as tails
on both sides and this is more or less
how a bookmaker that makes money let’s
examine this in more detail so now you
understand how a bookmaker makes money
they make it by creating a false market
effectively how can you spot as a punter
whether you are actually betting in to
an unfair market well it’s actually
quite simple if you use a betting
exchange on the top of the screen on the
betting exchange you will see a figure
represented as a percentage this is what
they call the over round and if the over
round is low than you’re betting into a
fair market but if the over round is
high then you’re betting into an unfair
market so anova round is very similar to
what we looked at with the coins apart
from the way that you look at an over
round is quite simple if we look at a
football match for example you have
three selections within the football
match the home team could win the away
team could win or the match could end in
a draw one of those three things is
going to happen and therefore there is a
hundred percent chance of a home win and
away win and a draw and therefore the
over round should equal 100 percent
the closer the over round is to 100% the
fairer the market so if you use a
betting exchange you will find the other
round prominently displayed on the
screen if it’s not there you can
actually switch it on if you’ve
accidentally switched it off and that
will allow you to identify markets that
are fair
or unfair you’re looking in a market
where there can only be one winner for
the over round to be roughly 100 percent
so where can you find the over round on
a bookmaker or on a sports book well a
simple answer is you can’t they hide it
they do not display the overrun and that
is because they do not want you to know
that you’re betting into an unfair
market so you have to manually work out
with a bookmaker or a sports book just
how big that over round is so an
important thing to understand with the
over round is the more uncertain the
event the bigger the number of
selections generally the bigger over
round and that is why the Grand National
is a key target for bookmakers and
sports books every year there are 40
runners it’s a very competitive handicap
race which basically means that nobody
knows who’s going to win so all of that
uncertainty and a very large field size
leads to very very large overruns in
other words the bookmakers in theory
have a massive edge against you what we
did was we went and had a look at the
Grand National to compare how big this
number was and if you actually look at
the data you’ll find that on betting
exchanges the over round was 1% or less
but on bookmakers the over round ranged
from 26% to 50% so basically the amount
of margin that was being lost the number
of unfair coins in the game was
absolutely huge on the grand national
and as a consequence this is why there’s
so much focus on trying to get you to
have a bet on the Grand National simply
because the bookmakers simply cannot
lose with over ends on that scale so
let’s put this into context by going
back to where we started which was
looking at those 5 coins we had a market
with 5 sections 5 coins but you could
only ever possibly win because we were
cheating we were changing the pricing
within the market on four of those coins
effectively every bet that you made with
us you were risking that you could lose
and we would keep one of those coins so
imagine if you keep on doing this
process eventually you will run out of
money why because you’re betting on five
events but you could only ever possibly
win on four I gained on theory 1/5 of
every bet New York
place with me so you could actually
place five bets and completely go broke
with no hope of return and that is
because you’re playing in an unfair game
and the more you bet in an unfair game
than the more money you will lose over
the long term and that’s more or less
how bookmakers make their money so
bookmakers always win in the long term
or do they because there is a way that
you can bet that will guarantee you a
win regardless of who goes on to win the
event that you’re betting on that sounds
interesting to you check out some more
of our videos

16 thoughts on “Betting strategy tips – How bookmakers make money from sports betting”

  1. Good explanation. It's amazing how many people keep on betting against the house edge unaware of the simple concept, or are unable to think in the long term. I get that people like the excitement of the Grand National once a year but for me I'm only interested in making money so I won't gamble even on that. Effectively exchanging your money for 70-95% of it back in the long run. It's frustrating that people aren't prepared to listen or educate themselves but the happy upshot is that's why trading works for those who are prepared to put in the effort

  2. Bit of a odd graphic you brought up showing the overround of different bookies. Considering bet bright and Stan James are out of business

  3. Hi Peter, sorry for my english. I just wanted to thank you, you opened my mind with your videos, and it will sound strange, but actually i've started following you in order to be a good trader, and i ended being a good better. I make it short, i have an edge in football, (thank you btw, i did n t know what an edge is when i started), but i struggled so hard to make my strategies profitable. I tried a lot of approaches, studied different entry and exit points, windowing, good positioning. I actually did it and became profitable but… all strategies i developed are impossible to scale up.( on the exchanges)
    It would be an interesting argument in my opinion, and i think that all your work is extremely valuable, especially for pre match racing and tennis, but football is just another world, and i noticed that in your videos…i can feel you struggled so hard finding edges in this sport , and a lot of famous traders just don t bother with football.
    Football requires a tremendous turnover per month , high stakes and super efficient markets with little or no spreads. Tennis and horses markets can do that, but trading football (in live i mean) is just paying spreads, because you won t ever have the same amount of opportunities, with market full of cash , volatility, no spread at all, like horses and tennis, just my opinion, i don t want to sound arrogant.
    So you should put a disclaimer on your channel:) , follow my advices but don't lose so much time on football!

  4. At this rate it's only a matter of time before one of your videos goes viral. Although it would have to be something outrageous, to really catch the attention of all the mugs out there.

    Don't forget that you promised to make a follow-up video on football stats and which sites to use (sofascore attack momentum, live xG etc).

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