How Do Sports Betting Sites Make Money?

It’s an exciting time to be involved in sports betting as the industry continues to boom. The legalization and regulation of sports wagering is an intriguing development for bettors, who now have a safe way to place money on sports for entertainment or in an attempt to earn a profit. However, do you know who else this is good for? It’s good for the sportsbooks.

For the vast majority of sports bettors, here’s the hard truth. It’s incredibly difficult to make money wagering on sports. The system is designed for the sportsbooks to win and for the sports bettors to fail, and it’s not going to change anytime soon. While one could argue that the legalization of sports betting for many states, including Virginia, is good for both sides, the house is still going to win more often than not.

Why is that? Sports betting seems so easy from the outside, but once you’re involved, you’ll realize the likelihood of being a consistent winner and earning a profit wagering on sports is extremely low. On this page, we will explain why that is and what makes the sportsbooks significantly more likely to succeed in the long term against the betting public.

What is the vigorish in sports betting?

If you’re new to sports betting, you may not be familiar with the word vigorish. If you have some experience in the industry, you may have heard the term vig, which is short for vigorish. It’s often referred to as the vig or even the juice in sports betting lingo, but we’ll stick with vig for the rest of the article. If you want to know why sportsbooks are set up for success, the vig is the No. 1 answer for that. Here’s a quick explanation of what the vig is.

If you’re somewhat new to the sports betting industry, you’ll likely notice all the numbers with the pluses and minuses but may not fully understand what the odds mean. Let’s look at a fictional example for a potential NFL matchup between the Washington Football Team and the Dallas Cowboys. If you’re looking at the point spread, it might look something like this if Washington came in as 3.5-point underdogs.

  • Washington Football Team      +3.5 (-110)
  • Dallas Cowboys                       -3.5 (-110)

You likely know the spread is 3.5, with the plus signifying the underdog and the minus sign showing the favorite, but what about the -110 number next to it? That’s where the vig comes in.

The standard vig for most point spreads and point totals is -110 on each side. It may fluctuate based on market action and how different sportsbook operators decide to run their business, but -110 is the standard in the industry. It essentially means you’d need to bet $110 to earn a $100 profit on a winning bet. So where does that extra $10 go? It goes to the sportsbook.

Regardless of whether you win the bet, the sportsbooks at least get a cut of your wager the second you place the bet. In this scenario, if you bet $110 on Washington to cover and your bet wins, you earn a $100 payout. However, if you bet $110 on Washington and it fails to cover, you lose $110.

In an equally balanced system, your $110 bet would lead to a $110 payout, but it’s not a balanced system, and that’s the main reason sportsbooks have an advantage over the betting public. Even if you are getting exactly 50% of your bets correct, you’re losing money.

When you are placing other wagers, like on the moneyline, for example, the numbers would very likely change to something other than -110. Point spreads and point totals are created to somewhat even the playing field for which side of the bet will win. A moneyline wager is betting on the outright winner of a particular game. If you’re a sports fan, you know that not all teams are equal going into a particular matchup. The moneyline odds are reflected in the vig.

For example, let’s stick with betting on the NFL and pin the Jacksonville Jaguars against the Kansas City Chiefs. Kansas City is going to come in as the favorite in this game, and that will be reflected in the vig. Here’s what this may look like.

  • Jacksonville Jaguars     (+375)
  • Kansas City Chiefs        (-550)

As you can see, the vig is not at the standard -110 on each side, and it’s because oddsmakers expect the Chiefs to win. As with the previous example, we’ll explain the payout structure using the $100 mark. In this scenario with Kansas City at -550 odds, it means you’d need to risk $550 in order to return a $100 profit. Meanwhile, if you think the Jaguars have what it takes to pull off a pretty big upset with +375 odds, a $100 bet would net a $375 profit.

In a fair betting system, if the Chiefs are at -550 odds to win on the moneyline, the Jaguars would be at +550 for an outright victory. But, as mentioned earlier, it’s not a fair system.

Understanding line movement

Line movements are an important facet of betting to understand. Where the lines stand right now might not be where they end up as we get closer to the start of a particular game. How and why the line moves depends on a number of factors, including team news and injuries. Additionally, the line may move based on the betting public. Sportsbooks can change lines to further protect themselves from significant losses.

As often as possible, sportsbooks will want to see an even amount of action on both sides. If there’s an even split, the sportsbook is guaranteeing itself a payday because of the vig, regardless of which side covers. Because of this, oddsmakers have to be flexible and willing to adjust the odds where needed.

For example, if 80% of the money is coming in on the Denver Broncos at +10.5 in a game against the Los Angeles Rams, online sportsbooks may shift their lines to try to even out the wagers and drop Denver to +10 so more Rams bettors can get in on the action in an effort to mitigate the risk of a big loss for the sportsbook.

Predicting where the line will move leading up to game time is a tricky thing to do, but those who have a knack for predicting where it will go can find themselves tremendous value by the time the game starts.

Are sportsbooks legal in the US?

If a state has legalized sports betting, then yes, sportsbooks are legal in that state. In May 2018, the Supreme Court overturned the Professional and Amateur Sports Protection Act, also known as PASPA, which opened the floodgates for states across the country. Individual states now get to decide whether to allow sports betting inside their borders, and they can set their own rules in terms of how to regulate sports wagering.

Sports betting is not legal in every state, and it’s certainly possible it never will be, but more and more states — including Virginia — are legalizing and going through the process of deciding how they want to set rules inside their state.

Is it possible to consistently beat the sportsbooks?

There is no one way to beat the sportsbooks on a consistent basis. If there were, everybody would be using that system, but a perfect betting system does not exist. As soon as sports bettors identify a particular trend that churns out consistent winners, oddsmakers adjust to remove that advantage when setting their lines moving forward.

The best thing you can do is to continuously put yourself in the best position to have an edge over the sportsbook. It might take a ton of research and analysis to figure out a way to turn a profit on a consistent basis. In addition, you’ll need to be flexible in being able to change your ideas when new data points come in.

What is the most profitable sport for sportsbooks?

Answering this question with full certainty would mean getting inside information from the sportsbooks themselves, but it’s a safe bet that sportsbooks in the United States are making the most money on the NFL. It is by far the most popular sport in the country in terms of the fans who watch each week and the amount of betting handle that comes in on NFL games. The NFL remains king in the eyes of American sports fans, and the more bettors on the sport, the more money will be going to the sportsbooks.

How many of my bets do I have to win to be profitable long term?

As mentioned earlier, due to the vig or juice, getting half of your bets correct with -110 odds will end up losing you money even when you are picking winners at a 50% success rate.

The number 52.4 is an important one to know whether you’re just starting out or an experienced gambler. Getting 52.4% of bets correct is just the break-even point for bettors. If you can consistently keep your winnings above 52.4%, you’re making money and earning a profit as a sports bettor. It’s a difficult thing to do. Some of the most successful betting experts are hitting at 55% consistently, which is a good spot to be in. If you ever get to the 60% range, you’re one of the more elite sports bettors out there.

How many sports bettors are profitable?

It’s impossible to know the exact number, but the percentage of sports bettors who have turned a profit has to be very low. It’s certainly possible that new sports bettors who take earning a profit seriously could improve whatever this percentage is. There has never been more coverage of sports betting than there is right now, and bettors who are just starting out tend to make mistakes. Proper research and understanding of the industry, however, can help mitigate some of those sports betting errors.