Bookmakers

A bookmaker is a term used to an individual or business that is licensed to take bets on racing, sports or other events. Each bookmaker is an independent trader or business, competing for custom with the other bookmakers at the racecourse, on the high street or over the Internet.

Although most people common refer to betting shops as bookmakers, the term actually applies to the person who makes the maker in bets, by offering odds on certain eventualities, and adjusting the payout odds in response to demand from the market. This process is the art of bookmaking, which has existed as a professional science since around 1820.

Bookmaking works because of the principle of over-round, which is the element of underpayment within a set of odds from which bookmakers deriver their profit. To put it more clearly, say two tennis players are evenly matched. The bookmaker may offer odds of 4/5 on each player. If a total of £1000 is bet on each player, then the bookmaker’s holdings would be £2000. When one of the players wins, the bookmaker would pay out £800 in winnings, as well as returning stakes of £1000. This would leave the bookmaker with £200 profit.

The above is a very simple example – obviously things get a lot more complicated when there are large numbers of competitors, with large but different amounts of money being bet on various competitors at different times. In such circumstances, the odds need constant readjustment to ensure that the market remains balanced and the bookmaker’s profit margin remains intact.

In the UK a large proportion of gambling takes place in high street betting shops, which are normally the permanent establishments of major bookmaking chains such as William Hill and Ladbrokes. Sometimes these betting shops are known as turf accountants. It is only in the last 30 years or so that these establishments have been permitted to take bets on an increasing range of activities, provide in-store live coverage of events and enjoy other concessions.

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