With the U.S. sports season now in full swing, people are looking for ways to bet on their favorite teams. There are dozens of online bookmakers, all offering free betting services to people who join up. But aside from joining a bookmaker, there are ways for people to wager on sports events independently.
The most popular way to do this is via sports betting companies. These companies act as middlemen between sports fans and bookmakers, taking a cut of the profits for themselves. But how do they make money? Let’s take a closer look.
One of the ways sports betting companies make money is via ‘monetary transactions’ – the bets that fans make directly with the company. Imagine if you’re a Philadelphia Eagles fan, and you want to bet on the team to win the Super Bowl. You visit an online company that handles wagering for major sports teams, and you place your wager using credit card information you provided when you signed up for the site. The company then contacts the bookmaker, setting the amount of the wager and the type of bet (over/under, favorite, etc).
Monetary transactions are great for people who want to quickly and easily make a bet, and they provide a way for people to continue placing wagers even if the books close for the night. But they can be a pain for people who want to keep track of their bets, as they are easy to lose track of once they are placed. Also, occasionally bookmakers will try to pull a scam by charging your card twice for some incident (such as ordering food or paying for gas). This has happened to a number of users, and it’s annoying as hell. So if you’re not careful, you could end up spending more than you intended just to make a bet.
Another way that sports betting companies make money is via operating costs – the costs associated with operating a business. For example, the company may pay a premium for the right to use their servers, purchase equipment like CCTV cameras, and/or employ employees. Some companies also charge customers for accessing their services, so if you’re not keen on joining a bookmaker, you may want to look into another way of placing wagers.
Revenue From Advertising
One of the ways that sports betting companies make money is via revenue from advertising – the money they make from selling and directing ads at their website visitors. To get an idea of how much money this is, consider the following:
– The New York Times reports that in 2015, American casinos earned $32,000 per day in profit, and those in UK gambling houses made £16,500 per day.- The Washington Post reported that in 2015, the top three online gambling companies (GoldenPalace, BetOnSports, and Mybet) earned $2.16 billion in annual revenue.- In 2014, the three largest online sportsbooks earned around $2.3 billion in annual revenue, according to The Hollywood Reporter.
People visit sports betting companies’ websites to get the information they need to make informed wagers. So it’s natural that they’d want to be directed to as many places as possible to get the services they need. But what happens when they get there?
The answer is that advertising plays a big part in the creation of revenue for sports betting companies.
Forbes reports that in 2014, digital marketing and advertising expenditures reached $16 billion worldwide, and it’s expected that this number will almost double by 2021.
In the U.S., Google AdWords and Facebook Ads are the two largest advertising platforms, and they charge advertisers based on the number of impressions or ‘hits’ their ads generate. For instance, if an advertiser wants to target people searching for ‘Barcelona football club’ vs ‘Liverpool football club’, they would create two ads, one for Barcelona and one for Liverpool, and would set the price for each based on how many people saw the ads and how much they wanted to pay per conversion (a Barcelona fan who clicks on the ad and makes a purchase, for example).
How Do Bookmakers Make Money?
Despite the fact that they take a cut of the money bet on their games, bookmakers also have to cover their own costs. One of the ways they make money is by taking bets from customers and operating their own sports books, or by purchasing a share of an existing bookmaker’s line. Consider the following:
– The Brooklyn Nets played the Toronto Raptors in a preseason game on August 31, 2018. The game was sold out, and gamblers from around the world put money on the game. The final score was Nets 97, Raptors 93. The total score was 162-164 (9.25), which was close to the total score (9.29) from the Vegas line. Bookmakers make money via ‘spreadage’ – the amount of money wagered on each team minus the ‘juice’ (vigorous use of language intended to evoke visceral reactions of shock and/or disgust) on either side of the game. In this example, the juice was 3.25, so the spread was 0.75. This means that for every $100 wagered, the bookmaker would make $75 in profit (assuming they took the same percentage of the bet as the sports book did). If the juice was 2.5, then the spread would be $250, resulting in a $125 profit for every $100 wagered.
The Bottom Line
So how much money can you make betting on sports? It depends on how much you want to risk, of course, but there are dozens of ways you can make a steady profit. The important thing to keep in mind is that you can make money with or without a bookmaker. No matter what you decide, there will always be an opportunity to bet on sports.