I used to work for some of the UK’s biggest bookmakers. I initially ran betting shops, and then did odds-compiling and trading – latterly specialising in online Asian Handicap markets.
These days I work for a Scandinavian based European football betting syndicate as a quantitative analyst and modeller.
In what ways are Bookmaker and Syndicate organisations similar? How do they differ?
Back to win, lay to lose
Fundamentally, running a sports betting syndicate and operating as a sports bookmaker are very similar tasks.
It involves betting on sport. And it involves getting an edge – finding a way to have the odds in your favour often enough that you end up making a long-term profit.
Syndicates place bets, whereas bookmakers take bets. But really these are two sides of the same coin. If you think of a tennis match between Federer and Djokovic, then placing a bet on Federer to win is exactly the same things as laying Djokovic to lose.
Poachers & Gamekeepers
The relationship between a syndicate and bookmakers is often described as like poacher vs gamekeeper. But this isn’t really true. Both bookmakers and betting syndicates make a long-term profit. So it can’t be that one is profiting at the other’s expense. The reality is that both bookmakers and syndicates ultimately profit from the losses of the ‘recreational’ bettors who make up the vast majority of the sports betting market. There are plenty of minnows in the sea for both.
Almost everybody who bets on sport as a hobby loses money over a long-term. Largely, the reason for this is NOT that bookmakers and syndicates know more about sport. It is just that they have a better understanding of working in the language of probabilities.
Price Is What You Pay, Value Is What You Get
The difference between winning and losing at betting is governed by the PRICES at which you bet, not WHAT you actually bet on. Bookmakers and syndicates don’t predict what is going to happen. They don’t think in terms such as ‘I think Barcelona will win tonight’ or ‘I really fancy this horse to win’. Thinking in such a black and white way is what the recreational/hobby punters generally do. All professional gamblers, layers or backers, make a profit by finding ‘value’.
Syndicates and bookmakers talk in language such as ‘that horse has a win probability of 45%’ or ‘I think Barcelona’s supremacy expectation is 1.76 goals’. Those probabilities are then converted into betting prices. A bookmaker displays his prices for customers to bet on, whereas the syndicate uses its prices to compare to bookmaker prices – and will only bet if the bookmaker’s price is bigger; in other words, the price represents value. A syndicate looks at the world much more like a bookmaker than like a typical punter.
So there is more that makes syndicates and bookmakers similar, than makes then different. The big difference between them as businesses though is that bookmakers operate with the considerable advantage of an over-round.
Over-round is a bookmaker’s margin. When they take a bet from a customer they are effectively charging them more for the bet than it is really worth. The difference between their idea of the real price, and the price they charge is their margin. This is how/where they make a profit, just like any business.
So, if they think Man United has a true 50% chance of winning (which as betting odds would be represented by 2.0 or Evens), they would add on say 2.5%. Their price that they offer to customers for Man United to win becomes 52.5%; 1.90 or 10/11. A bookmaker’s ideal scenario is to take an equal total value of bets on all outcomes so that they are guaranteed to keep their margin, no matter the actual result.
This bookmaker over-round is enough to beat almost all customers who bet with them. If punters just bet on what they think will happen, rather than working out probabilities, then the bookmaker’s margin will eventually defeat them.
Syndicates have the means to work out accurately what the ‘true’ chance is of an event occurring, and the discipline to only bet when the odds on offer are greater. They don’t bet just because they want an interest in a big match.
Pro-Active vs Re-Active
Syndicates concede to bookmakers the advantage of their over-round, but in their favour is the freedom to be selective. Bookmakers have to bet on every match, but a syndicate can pick and choose its competitions, leagues and matches. They have to be patient, waiting for opportunities to bet when the price is in their favour. Bookmakers are pro-active, and syndicates are re-active. Most of the time, the combination of a bookmaker’s good assessment of probabilities and their over-round means no profit opportunity exists for a syndicate, so they don’t bet.
Bookmakers need to take into account the bets they have already taken on an event (their liabilities), and can also try to anticipate what future bets they will take (e.g. Barcelona and Real Madrid may regularly come in for late support). As much as possible, they want to balance their books. So a bookmaker’s prices that you can see are not necessarily an accurate representation of what they believe the true probabilities to be. Syndicates however can take a totally single-minded approach.
Coffee and TV
The offices of a syndicate and a bookmaker generally look the same. There will be banks of computer monitors and TV screens, all with sport on. Lots of old coffee cups lying around…
The job of being a syndicate trader is pretty similar to working as a football odds compiler for a bookmaker. It involves watching plenty of football, looking at loads of football stats and working out probabilities.
How you work out those probabilities doesn’t ultimately matter, only that you do it well. Everybody uses computers and models these days, but these are just tools that make the job easier. They don’t replace the need for human intuition, judgement and ability.
A version of this article originally appeared on Odds-Invest.com. I write betting related articles for them in addition to my day job there.