How Do Betting Markets Work?

Betting markets

Betting Markets are Traditional Markets

Betting markets are a marketplace no different to everyday markets, like the ones where you can buy fruit & veg. They all work under the same rules, the laws of supply and demand.

Bookmakers run their business in an identical fashion, their commodity is cash though as they do not sell a product which you take home – unless you win and then you take away their cash.  

An online sportsbook has a simple aim is to ‘sell’ bets to you by making their odds attractive. They are obliged to offer odds on all possible outcomes of a race or match meaning they have to offer odds on every conceivable result too.  

It can never be forgotten a bookmaker’s goal is to ensure whatever the outcome of any contest they show a profit. In order to do this they need to take bets on all of those potential outcomes. But things are never so simple and punters will invariably be scrambling to back one horse (or team) more than the others.  

Grand National at the bookies

As the bets come rolling-in on the favoured horse bookies will shorten its price in an attempt to lessen any potential liabilities. At the same time they have to push out the prices of other horses hoping to attract some bets on them. This is how one horse ultimately becomes favourite – because it is the runner ‘favoured’ by the punters – and others become outsiders.

Here’s an Example…

A bookmaker’s odds compilers have looked at a 3-runner race and concluded every runner has an equal chance of winning. Theoretically each runner should therefore be 2/1, but they will make every horse 7/4 giving themselves a small ‘edge’ or profit margin.

But the punters have decided this is not a finely balanced race and they want to back Horse A. and they pile their cash on it. Realising victory for Horse A. would represent a big loss the bookmakers are forced into reducing its odds while pushing out the odds of Horse B. and Horse C, hoping to attract some bets on them and making their liabilities (potential losses) on the favourite smaller.

So, while three horses were originally 7/4 apiece, by the race start they could be very different, say even-money, 2/1 and 7/2 when the final SP’s (starting prices) are declared.

Bonuses Boost Chances

In short, the art of bookmaking is pretty much a case of bookkeeping, namely keeping a balanced book and this is achieved by price fluctuations, buy and sell, and the laws of supply and demand.

And while most newcomers to sports betting believe the art of winning is all about finding winners, shopping around and getting the best value (the best prices) about your selections is equally important.  

Unquestionably those that consistently shop around for the very best prices and exploit the best bonuses, such as free bets, odds boosts and money back concessions, have a considerably better chance of being a winning punter in the long-run. That’s because every percentage point a punter can get on their side increases a bettors chances of winning just like it does for the ‘old enemy’, the bookmakers.