Bookmaking, gambling practice of determining odds and receiving and paying off bets on the outcome of sporting events (particularly horse racing), political contests, and other competitions. Some Commonwealth countries (including the United Kingdom, Australia, and New Zealand), Belgium, and Germany permit the open operation of bookmaking organizations.
In the United States there are probably several hundred thousand bookmakers, only a few thousand of whom (in Nevada, New York, and New Jersey) operate legally. A number of casinos in the United States operate as bookmakers in accepting bets on primarily sporting events; this section of the casinos is usually called the sports book. In addition to horse racing, in which the track odds form a basis for bookmakers’ odds, legal bookmaking concentrates on professional sports such as baseball, American football, basketball, and boxing. Morning-line odds, established by legal bookmakers, are printed in the sports sections of newspapers throughout the United States. Before 1950, illegally operating bookmakers established a national organization of expert observers who transmit their odds through a network of clearinghouses to individual bookmakers.
The bookmaker seeks in every case to achieve a balanced book—one in which bettors are competing against one another—so that he will profit whatever the outcome of the event. For example, if one bettor bets 6 to 5 on A and another bets 6 to 5 on B in a situation where only one can win, the bookmaker will collect 12 units and pay only 11 units no matter which bettor wins. The vagaries of individual bettors and special information acquired by certain large bettors often make a truly balanced book impossible. To protect himself, therefore, the smaller bookmaker will either limit the total amount bet on a favourite or will “lay off” (re-bet) with a larger bookmaker such bets as he is not prepared conveniently to pay if he loses. Laying off has led to the creation of several large and heavily capitalized bookmaking organizations that accept only bets laid off by other bookmakers. The casual bettor is thereby insured against such losses as often occurred before the 1940s, when local bookmakers, ruined by the victory of some heavily played horse or team, defaulted and vanished.
Bookmaking as a profession is known from the time of ancient Rome, when betting on the outcome of gladiatorial matches or chariot races was widespread. In the modern sense of the word, however, bookmaking did not appear until the late 18th century in England. In many countries the only legal form of bookmaking, chiefly on sporting events, is done via state-owned or state-supervised organizations.
This article was most recently revised and updated by William L. Hosch, Associate Editor.
How Bookmakers Make Money
We look at how bookmakers set their odds so that they would make money off the bettors. A bit more on decimal and fractional odds: …