Bookmakers

What are Bookmakers?

Bookmakers, also known as betting agencies, are companies or individuals that facilitate betting on the outcomes of various events, primarily sporting events like football. They operate by offering odds on different potential results, allowing individuals to place wagers. If a bettor’s prediction is correct, the bookmaker pays out winnings based on the initial stake and the odds provided. Essentially, bookmakers act as intermediaries, setting the terms for bets and managing the financial transactions between bettors and the events they are wagering on.

How bookmakers operate

Bookmakers work by acting as middlemen between individuals wishing to place bets and the events they are betting on. Their core tasks follow the following processes:

Setting odds

This is a crucial aspect of a bookmaker’s business. Odds are the bookmaker’s assessment of the probability of a particular outcome occurring in an event. They are typically expressed in various formats (e.g., decimal, fractional, American). The odds also include the bookmaker’s profit margin, often referred to as the “overround” or “vig,” which ensures they can make a profit regardless of the outcome.

Offering betting markets

Bookmakers provide a wide range of betting markets on a single event, especially for a popular sport like football. These markets include the outright winner, the number of goals scored, the first goalscorer, the half-time score, the number of corners, and many other occurrences within the game.

Accepting bets (stakes)

Bettors place their wagers with the amount of money they wish to risk (their stake) on a specific outcome at the odds offered by the bookmaker.

Managing liabilities

Bookmakers constantly monitor the bets being placed on different outcomes to manage their potential liabilities. They adjust odds in response to betting patterns to balance their risk and ensure they are not overly exposed to any single result.

Paying out winnings

If a bettor’s prediction is correct according to the rules of the bet, the bookmaker pays out the winnings, which are calculated by multiplying the initial stake by the odds offered at the time the bet was placed, plus the return of the original stake (and any other bonuses the bookmaker offers to the bettor).

The evolution of bookmaking

The practice of bookmaking has a long history, changing from informal arrangements made on a gentleman’s agreement to a complex global industry. Early forms of betting on sporting events existed for centuries, often taking place amongst individuals or within small communities. However, organised bookmaking as we know it today began to emerge in the 18th century in England, particularly around horse racing.

Initially, bookmakers operated primarily at racecourses, taking bets directly from spectators. As sports became more organised and popular, the demand for betting opportunities grew. This led to the establishment of physical betting shops in towns and cities, providing a more accessible way for people to place wagers on a wider range of events.

The latter half of the 20th century saw changes in the bookmaking industry. Legislation in many countries began to evolve, leading to the regulation of betting shops. This provided a more structured and controlled environment for bookmakers to operate.

The most transformative period for the industry has been the advent of the internet. The rise of online bookmakers in the late 20th and early 21st centuries revolutionised how people bet. Online platforms offered convenience, a lot of betting markets, and often competitive odds due to lower overheads. This shift also expanded the reach of bookmakers globally, allowing them to cater to customers in various jurisdictions (subject to local regulations).

Mobile betting further accelerated this trend, enabling users to place bets anytime, anywhere via their smartphones and tablets. The industry continues to advance with the integration of new technologies, such as live betting (in-play wagering), virtual sports, and esports betting, reflecting the changing interests of bettors and the innovative approaches of bookmakers to attract and retain customers. The journey of bookmaking shows a constant change to technological advancements and evolving societal attitudes towards gambling.

Bookmakers impact on football and the society

Bookmakers have a significant impact on football and on society as a whole:

– Financial contributions to football: The betting industry provides a lot of financial contributions to football through sponsorship deals with leagues, clubs, and broadcasters. Some popular teams like West Ham, Real Madrid and Chelsea have been partnered with betting companies before. These partnerships are a good source of revenue, helping to fund the sport/team at various levels.
– Increased fan engagement: The ability to bet on matches can heighten fan interest and engagement with football. It adds an extra layer of excitement and investment in the outcomes of games, leading to increased viewership and participation in discussions and debates surrounding the sport.
– Integrity concerns: The close relationship between betting and football also raises concerns about match-fixing and the integrity of the sport. There have been instances where individuals have attempted to manipulate match results for betting gains, posing a serious threat to the fairness and credibility of football. Governing bodies and bookmakers themselves invest in monitoring and intelligence to fight such activities.
– Responsible gambling and addiction: A significant impact of bookmakers is the potential for gambling addiction and related harms. People can develop problematic gambling behaviours. Bookmakers and regulatory bodies are increasingly focused on promoting responsible gambling practices and providing resources for those who may be struggling.
– Economic activity: The bookmaking industry itself generates significant economic activity and employment, from those involved in setting odds and managing risk to customer service and technology development.
– Data and analytics: Bookmakers have been at the forefront of collecting and analysing large amounts of football data to inform their odds setting. This data has also become a resource for football analysts, coaches, and even clubs themselves, contributing to a more data-driven understanding of the game.
– Cultural integration: Betting on football is a deeply ingrained part of the sporting culture in many countries. Pubs and social gatherings often revolve around watching matches and having a wager on the outcome.

The regulatory part of bookmakers

Bookmakers operations are subject to a set of regulations that vary across different countries and jurisdictions. These regulations are used to ensure fair practices, prevent criminal activity such as money laundering and match-fixing, protect vulnerable individuals from gambling harm, and generate tax revenue for governments.

Key aspects of the regulatory landscape include:

Licensing requirements

In most regulated markets, bookmakers are required to obtain licenses from specific regulatory bodies before they can offer their services to people of that jurisdiction. These licenses come with conditions related to financial stability, operational standards, and adherence to responsible gambling practices.

Responsible gambling measures

Regulations force bookmakers to have measures to promote responsible gambling. This can include offering tools for customers to set deposit limits, stake limits, and time limits on their betting activity. They may also be required to provide information and links to support services for problem gambling.

Anti-money laundering (AML) and know your customer (KYC) procedures

Bookmakers are obligated to implement robust AML and KYC procedures to verify the identity of their customers and monitor transactions for suspicious activity. This helps to prevent their platforms from being used for illegal purposes.  

Advertising restrictions

Many jurisdictions have regulations regarding the advertising of gambling services. These can range from limitations on the types of media that can be used to outright bans on advertising during certain times or around specific events. The aim is often to protect minors and vulnerable individuals from excessive exposure to gambling promotions.

Taxation

Governments often levy taxes on the revenue generated by bookmakers or on the stakes placed by bettors. The specific tax rates and structures can vary considerably.

Data protection

Bookmakers handle significant amounts of personal and financial data from their customers (especially during user KYC verification) and are therefore subject to data protection and privacy regulations.

Sportmonks and bookmakers

Sportmonks is a key data provider for the football betting industry, as it offers a comprehensive football API that supplies bookmakers and related services with essential real-time and historical data. 

This data is fundamental for bookmakers to set accurate and competitive odds, manage their risk exposure across numerous betting markets, and provide detailed information to their users.

Through their API and partnerships, such as the one with TXODDS for a Premium Odds Feed, Sportmonks creates access to odds from a wide array of bookmakers. Their API supports integration with over 25 listed bookmakers, including major players like bet365, Betfair, and Pinnacle. This connectivity allows Sportmonks to serve as a central hub for football data, benefiting bookmakers by streamlining their data acquisition processes and improving the quality and scope of their offerings.

Power your betting platform with Sportmonks’ Football API. Sign up today to access real-time data and odds from top bookmakers.