Typically, the main goal for most online websites is to attract as many customers as possible. Traffic means sales and these sales in turn mean the business can make money. Online betting sites largely work in the same way but there is a big difference in that not every paying customer is good for business. There are some gamblers that win considerably more money than they put in, meaning the bookie ends up losing money from their activity.
Do bookies ultimate care about this though? If there is one customer cashing in for every eight losing ones, then does it really matter to them? While this can depend on the betting website itself, there are numerous examples of bookies intervening when a player starts taking too much of their cash.
The Pursuit of the Balanced Book
If you are someone that has bet online before, you will probably be fully aware of the idea of the ‘bookmaker margin’, also known as house edge, overround or vigorish (some of these terms are technically subtly different from each other but are often used interchangeably). This is something you will find present across all sports and all markets, and basically it is what helps keeps bookmakers in business. To explain it simply, let us give an example of a market with two options, of which the bookies deem equally likely.
In the above example, the bookie is indicating that Brooksby and Draper have an equally likely chance of winning this tennis match, so it is a 50/50 gamble. You will notice the odds are not 50/50 however, otherwise they would be both trading at 1/1 (evens) rather than a skinnier 17/20. A pair of 17/20 prices means that rather than the implied probability being 100% (which would be completely fair, no house edge whatsoever) it is actually 108.11%. This means the bookies enjoy an 8.11% house edge for this particular market.
Meaning of ‘Balancing the Books’
Ideally, what would happen in this situation is that bets would fall equally, or roughly equally between the two tennis players, meaning a profit is guaranteed regardless of the outcome. If £1,000 was gambled on Brooksby and £1,000 on Draper, the bookie would be guaranteed to be £150 up at the end of the game (£2,000 in bets taken – £1,850 in returns). In such cases, the bookies could not care less which customers win and which lose because they are quids in regardless.
This is what is known as successfully balancing the books and it is usually achieved, or aimed for, by altering the odds. In real terms this means that if they have too much liability on one team or player, they make the odds on them shorter and the prices on the other teams or players longer, hoping to encourage us punters to bet on the rest of the field and thus make their books balanced, or close to it.
Obviously, the chances of two markets attracting the same value of bets is very small so rarely do bookies have a perfectly ‘balanced book’ but it does not need to be. If £900 was wagered on Brooksby and £1000 on Draper, the bookies will still be in the black either way once again. Here they would prefer Brooksby to win but it would not be bad for them if Draper prevailed, as you can see from the calculations below:
Brooksby win: £1,000 in losing bets – £765 in winning bets = +£235
Draper win: £900 in losing bets – £850 in winning bets = +£50
In this situation, bookmakers have no reason to care which customers win and which lose because when they successfully balance the books, a positive outcome is guaranteed. Naturally, bookies will try and do their best to balance the books wherever possible and as said, this usually involves adjusting their prices. Sticking with the example above, if punters start putting much more money on Brooksby (meaning they will lose money if he wins), they will reduce his odds and increase the odds for Draper. This will make Brooksby a less appealing pick, likely reducing bets on him and also means they will pay out less on winning bets placed after the odds are cut.
Some Losses Impossible to Avoid
As much as bookies would love to always balance their books, this is often simply not possible. Some markets fail to attract a proportionate amount of bets and there are times when odds fluctuations have little impact on activity.
For this match, if 10% of bets went on a Fulham win, 15% on a draw and 75% on a Liverpool win, then the bookie would be guaranteed to be up. To keep things simple, let us see how this works if £10,000 was bet on the match, split in such a way.
|Returns Paid Out
|Outcome For bookie
Not bad right? But in reality what might happen is that punters stick £9,000 on Liverpool and just £200 on Fulham, despite the bookies adjusting their odds. It is typically the favourite that attracts a disproportionate amount of wagers and this is something you will see plenty of in horse racing too. Whenever bookmakers suffer some hefty losses, it is usually because a number of favourites won big races. The 2016 Cheltenham Festival saw the industry suffer £60m losses as nine favourites and one joint favourite claimed glory. Similarly, in the 2022 edition, bookies took a hammering on Gold Cup day thanks to four victorious favourites.
Individual Success Does Not Go Unnoticed
Although there are times that unbalanced markets that see bookies face heavy losses, on the whole, they win considerably more than they lose. The average punter’s knowledge and tactics are not enough to overcome the house edge and this is why bookies make substantial amounts of money each year. This is not to say every bookmaker business is guaranteed to be a financial success of course as they do face overheads, administrative costs and have to pay a substantial amount of tax as well. For those that struggle to attract enough customers, often these costs exceed the losses they are claiming from players.
Even the large, long-standing names in the industry though are not keen on customers that are too good at gambling. Whenever there are customers that consistently record a positive outcome and are betting with substantial amounts, bookies have been known to take action. You may think this is a little unnecessary for bookmakers who are winning overall but their main aim, as with most businesses in capitalist society, is to make as much money as possible.
By taking action we either mean closing a player’s account or more likely, heavily reducing the amount they can bet. In the case of one highly successful punter, Ian Sharpe, he was only able to place a maximum bet of 33p at several bookies. Such derisory maximum bets are common among pro- and semi-pro punters and one wonders why the bookies really bother.
Sharpe is (or potentially was) hardly alone in facing such treatment as when the article was published in 2018, it was estimated 50,000 punters had similar limitations on their betting accounts. This may sound like a hefty number but with 8.5m gamblers present at the time, this only accounts for around 0.6% of them. Of course, reducing the maximum permitted stake is not the strongest course of action a bookie can, and does, take.
Should Bookies Be Allowed to Block Winning Punters?
As far as the UK Gambling Commission is concerned, bookies can refuse bets and close accounts for whatever reason they choose. Their website states “Gambling businesses have the right to close any account and it may do so for many reasons”. Although they provide much less controversial examples for account closures, bookies certainly will not face any regulatory action for barring savvy punters. Individual cases of restrictions being placed is not especially newsworthy either so bookies rarely risk much damage to their reputation.
So, bookies are free to and regularly will severely limit players that are taking too much money from them. You will not end up blocked because you enjoyed a good few weeks but long-term wins involving larger sums are likely to provoke action. That is likely to start with small maximum stakes and possibly being barred from all offers and free bets and usually, sooner or later, tends to end in account closure.
There are many who argue it is unfair to discriminate against players that outperform the rest, especially as there are far more losers than winners anyway. Operating in this way effectively means anyone who regularly wants to bet must lose money overall, or only win a small amount.
While many punters demand that bookies simply suck up the losses from the small percentage of customers that can comfortably beat them, it is no real surprise they do not. Can you think of any other businesses that would continue to serve customers they lose money on? Imagine if there was an all you can eat buffet costing £15 but this one regular patron, with a giant appetite, regularly ate £60 worth of food. You would probably expect the restaurant to either limit their intake, charge an additional fee or ban them.
What Options Do Highly Profitable Punters Have?
By this point, we have well established that bookmakers do indeed care if you are taking lots of money away from them on a consistent basis. With this very likely to result in low stake limits, do profitable bettors have any other options or must they simply accept they can only win small amounts from now on? One option some might consider is placing bets via a friend or family member but this will contravene the terms and conditions of any bookmaker. There is, however, one option that actually works and breaks absolutely no rules.
For punters that end up blacklisted from bookmakers for being too good, they will simply want to use a betting exchange instead. Unlike a traditional bookmaker, an exchange, of which there are now three or four to choose from, is typically more than happy to welcome the best gamblers onto their platform. This is because on an exchange, gamblers are not betting against ‘the house’ rather they are betting against other punters. The exchanges themselves make money from taking a commission from winning bets, usually between 2% and 5% so their only concern is increasing the amount of money bet on events in total.
The outcome of the event, or which individual customers win or lose, is none of their concern because an equal amount of profit is secured in any case. This is because the liabilities of bets on an exchange have to be matched by another customer, or combination of customers. In cases where an initial bet amount is not fully matched, so only partially matched, the unmatched part of the stake is simply returned to the customer. So, at an exchange it is only losing punters that end up funding the successful ones, not the exchange itself.