Every year about three quarters of the adult population of the UK participates in some form of gambling. Although the majority spend their money on lottery and scratch cards, fixed odds bookmakers are a popular, and highly visible, part of the culture of betting in the UK.
Via both high street betting shops and online betting, the major bookmakers in the UK take in and process billions of pounds in sports bets every year. They also play a major role in sponsoring many sports events, including horse racing and football, and their brands are well represented at leading sport venues.
The world's leading bookmakers include:
If you’re trying to decide which bookmaker to use, visit our top bookmaker reviews for details of each bookmaker’s strengths and weaknesses.
How bookmakers work
At the most basic level, bookmakers allow you to bet on the outcomes of sports events. They assign a “price”, or odds, to every possible outcome of an event. The odds are based on probability calculations. Punters place bets at bookmakers in the hopes of earning payouts by successfully predicting the outcomes of events. Bookmakers, however, adjust their odds in order to generate an overall profit from an event no matter what its outcome is.
To succeed, bookmakers need to predict the probability of different outcomes as accurately as possible. This job is handled by bookmaker employees known as traders. Traders uses complicated statistical and mathematical tools that take as many variables as possible into account to determine the probabilities of all possible event outcomes. Examples of these variables are form, weather, injuries and home advantage.
However, these calculations can’t predict the future perfectly. Traders may fail to account for some variables. Also, certain variables, such as weather or injury, can change suddenly. This can significantly change the probability of an outcome once odds have already been set or bet on by a punter. Often bookmakers continually adjust their odds in the run-up to a sports event, making changes whenever the values of variables change.
Taking a cut
Although measuring probability as accurately as possible is essential for bookmakers to stay in business, it isn’t actually how they make a profit. If bookmakers simply relied on predicting probabilities, statistics tell us that over the long run, both they and the people who bet with them would end up breaking even. Instead bookmakers slightly lower the odds on any event, usually by between 5% and 10%. So the odds published by bookmakers are slightly lower than the actual statistical probabilities they’ve calculated for specific outcomes.
The percentage by which odds are lowered is called the overround, and this represents the bookmaker’s profit margin.This means that bookmakers pay out slightly less than they would have if they paid out at true odds. For example, it may mean that a bookmaker pays out $90 in winning bets for every $100 in bets placed on an event. The mathematics behind this can be fairly complicated. To find out more, visit our page on how odds are set.
Bookmakers aim to make their odds as accurate as possible, taking the overround into account. They also trust that all bets placed on an event will balance out across the various odds according to the laws of probability. When bets are distributed across the odds for an event in such a way that no single outcome will result in an overall loss for a bookmaker, this is described as a balanced book. A balanced book is the holy grail of bookmakers because it guarantees a profitable betting market.
Why odds differ among bookmakers
If you’ve placed sports bets before, you’ll have seen that different bookmakers offer different odds for the same event. There are two reasons why this happens. The first is that the bookmakers may use different statistical tools to create their odds, assign different weight to different variables that influence the odds or interpret variables differently. Because measuring probability isn’t a perfect science and the impact of variables isn’t always clear, it’s unlikely that bookmakers will all agree on the odds for an event.
The second reason that odds differ is because bookmakers are competing with each other for business from the public. For example, a bookmaker who offers better odds on the favourite for a race than other bookmakers is likely to attract more bets for the event. Every bookie will promise to offer the “best price” on a race or market from time to time. In an effort to attract new customers and outdo each other, bookmakers sometimes offer higher odds than those that are statistically probable. However, their odds have to be lower than the true odds most of the time if they’re to guarantee a profit.
A popular alternative to betting on bookmakers’ odds is using a betting exchange, where users set odds.