How To Start A Sports Book

Last month we held a little clinic on Sports Book betting and let you behind the curtain on some sports wagering slang terms. After all, you need to talk the talk before you can walk the walk. This month we are continuing our education in letting you know how Sports Books work. Again, if you know why sports books do the things they do, you may have a better experience while playing.

1. How To Start Your Own Sportsbook
2. How To Run A Sports Book
3. How To Start A Sports Book

1. Experience Circa Sports, the largest sportsbook in the world, where advanced sports betting technology meets good old Vegas hospitality. Opening October 28!
2. He got his start as the sportsbook manager at the Royal Inn in 1977 and has been a mainstay on the Vegas scene ever since. Currently, he is the director of sports operations and public relations.

Right off the bat, let’s be perfectly clear. Sports books make money on every straight bet they take action on. It’s a foregone conclusion. Let me explain.

If you're interested in becoming a sports book writer, one of the first things to consider is how much education you need. We've determined that 31.0% of sports book writers have a bachelor's degree. In terms of higher education levels, we found that 0.0% of sports book writers have master's degrees. If you need a starting point, start with the sites we’ve recommended at the top of the page. If none of these work for you, check out our sportsbook ranking page.

Sports Books charge vigorish also known as “the vig” or “juice”. Juice is the amount charged by a sportsbook for their services. By taking on the risk of handling all bets, the book takes a percentage, typically 10%. Why else would they take the risk of covering all bets? Bookmakers use this concept to make money on their wagers regardless of the outcome. Because of the vigorish concept, bookmakers should not have an interest in either side winning in a given sporting event.

Piggybacking that same concept, sports books set the line at a certain number that will encourage betting action on both teams. No matter what NCAA Football Predictions you may hear on the radio or read online, the point spread is there to encourage the exact same amount of money is wagered on both teams.

Please keep in mind that sports books have no rooting interest in any game on the boards. They just want equal action on both sides. Because most sports books keep 10% juice, when you win a bet, you are only paid about 190% of your bet. If you bet $100 on the Ravens this past weekend and another person bet $100 on the Steelers, the sports book would be happy. Because the Ravens won, the sports book would take the $100 lost by the Steelers bettor and apply it to your winnings. You would get your original wager of $100 plus a portion of the money the Steelers bettor lost. You would cash a ticket worth $190 and the sports book keeps the remaining $10 as their commission for taking the betting action and risks.

You may sometimes see a point spread move up or down from the day the opening line was announced to game time. A line moving up or down simply indicates one team has received an inordinate amount of money placed on it. Because the sports book wants to encourage equal betting on both teams, they will then move the line a point or two in the favor of the other team that has been under bet. By giving more points to the other team makes them more attractive to sports wagerers and thus encourage more money to come in on the other side.

When a sports book announces the opening point spreads, they are not based what the actual professional handicapper thinks will be the final score differential. The opening line is the handicapper’s guess as to what he believes the general public will perceive the final score to be. Under performing teams that are popular nationwide, Notre Dame is a prime example, will typically get smaller opening odds because handicappers know people will bet with their heart. Many fans will lay down a wager on their favorite team just because they want to support their team not only in their heart but at the betting window. Teams with large fan followings that are loyal to a fault are hard to handicap because the lines maybe skewed to encourage others to bet on the opposition and to balance out all the rabid fans.

Now that you know the inner working of how a sports book can afford to pay out all those huge winners, you can be a better informed and knowledgeable wagerer. Next month’s installment of Sports Book 101 will involve smart sports wagering and how to wager responsibly using a tight bankroll.

If you place bets on sporting events you’ve probably at least had a fleeting thought about starting your own sportsbook or bookie service.

Instead of paying vig on your bets you’d get to charge vig and be the one making money every week.

If you’ve had this thought and decided to start gathering more information about the possibility of starting your own sportsbook, I’ve put together some things to get you started.

Operating a sportsbook can be a profitable business, and if you do it in the right way with enough money behind you it’s one of the safest investments you can make.

But it isn’t for everyone, and it isn’t legal in all areas.

You need to answer several questions before you start, including:

• Do you have enough money?
• What are the legal issues where you live?
• How do you set your lines?
• How much vig do you charge?
• How do you handle growth?
• How do you keep track of everything?
• How do you recognize and handle sharp sports bettors?

Many of these questions can be answered by getting a good feel for what a reputable sportsbook looks like. If you’re interested in seeing an excellent site first hand, Sportsbetting.ag is a great place to start.
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Read my “How to Start Your Own Sportsbook Guide” below to learn the answers to these questions and more.

How Much Money Do You Need?

The answer to how much money you need depends on many factors.

You need enough money to cover any fees and licenses involved where you live and you need enough capital to cover all of your bets from the beginning. A properly run sportsbook always has enough cash reserves to cover every outstanding bet, no matter what the outcome.

The good news is if you set your lines well and adjust them as bets come in you can balance out your exposure.

Here’s an Example:
If you offer lines on six games for the day and receive the following bets on each game, all at 110 to 100.

• Game 1: $1,100 on team A and $990 on team B
• Game 2: $550 on team C and $990 on team D
• Game 3: $660 on team E and $660 on team F
• Game 4: $2,200 on team G and $1,650 on team H
• Game 5: $220 on team I and $0 on team J
• Game 6: $110 on team K and $550 on team L

The opposite bets cancel each other out, so your total exposure on each game is as follows:

• Game 1: $220
• Game 2: $440
• Game 3: $0
• Game 4: $550
• Game 5: $220
• Game 6: $440

So your total exposure is only $1,870 on a total handle of $9,680.

The worst case scenario is that all six games go against you. But the realistic expected outcome is three games go your way and three go against you.

This also doesn’t take into account the vig on the bets you win, which reduces your exposure further. Because remember that you keep the 10 extra of the 110 on the games you win. On game three you’re balanced so you’ve locked in a profit of $60.

If game one goes against you the $1100 goes back to the winners and you pay $1,000, but you collect $990 on the other side so your true exposure is only $10, not $220.

Here are the true exposure numbers when you consider the vig for each game.

• Game 1: $10
• Game 2: $350
• Game 3: No exposure – locked in $60 profit.
• Game 4: $350
• Game 5: $200
• Game 6: $390

So your actual total exposure including the vig if all the games go against you is $1,240. This is only 12.8% of the total handle of all bets placed.

Your sportsbook will have up and down times, with more bets on some days than others and in some weeks than in others. The big events bring out more betting action, and some sporting seasons are more popular than others.

This means you need to plan ahead to have enough cash reserves to cover larger exposure periods.

In the beginning, you probably won’t take tons of bets, but as your business grows – your handle, or the total amount of money wagered, will continue climbing.

If you’re able to set good lines and keep enough cash reserves the vig will consistently provide a nice profit. As your handle goes up your profits will follow.

• Do you have any idea of how many customers and how much they’ll bet when you open?
• Are you willing to turn away business if you take too many bets because your cash reserves are low?

These are the types of things you need to know in order to understand how much money you need.

It’s easy to say you need $50,000 or $100,000 or $1,000,000, but the truth is I have no idea how much you need. I’ve given you the information you need to figure it out, but every situation is different.

If you’re starting a local bookie operation that takes in $10,000 in bets a week or less you can probably start with $10,000. I suggest more, but it’s probably enough.

If you’re launching a sportsbook in a busy part of town with a full media blitz and grand opening you might need a half million or more.

A minimum amount for each day that I suggest is 20% of your expected handle for the day. Unless you’re very unbalanced on the schedule this should be enough to cover all of your exposure.

But you really need to have enough cash reserve to stay in business for months without much profit.

You’re going to be profitable with good lines and management, but it’s always better to have too much cash than to not have enough.

This doesn’t mean you’re going to be profitable on every game, every day, or even every week. A sportsbook is a long-term game, so you have to ride out the swings.

Over the long run, you’ll find that almost exactly half of the bets you take win and half lose. But sometimes the short term will be quite wild.

If you see that over time your results aren’t close to 50 / 50 (and you must track these numbers religiously), then you have a problem with your lines that must be fixed.

Well over 90% of sports bettors are no better than coin flippers when picking winners over time. Some estimates are over 95%.

If your business doesn’t show this to be true then something is wrong and you have to figure it out as soon as possible.

Another major consideration is the size of bets you’re willing to take. If your average bet is $110 are you willing to take a $5,000 wager, or a $10,000 bet?

The larger the spread of bets you’re willing to take the faster you can get too much action on one side of a game.

You need to think long and hard about the bet sizes you accept. You might accept bets from $20 to $200 to start and expand your limits as your business grows.

Only you can make this decision, but accepting larger bets means you need to have higher cash reserves.

If you have a normal daily handle of $10,000, a single $5,000 bet can put you in danger.

How Do You Set Your Lines?

Setting good lines is the most important thing you can do for a profitable sportsbook after having enough cash reserves.

You have two options when it comes to setting lines. You can set them yourself or you can steal them from someone else.

This may sound harsh, but setting your lines yourself is a huge mistake. Unless you have the resources to hire professionals who have years of experience setting lines like the biggest sportsbooks in the world, you’ll lose money setting your own lines.

Today, you can log onto the internet and have the lines from the top bookmakers around the world in a matter of minutes. You can compare dozens of lines quickly, so why wouldn’t you simply use the one for each game that seems to be the consensus?

Once you set your lines and start taking bets you need to watch the action that you have come in. If you get too much money on one side you can adjust the line to start pushing bettors to the other side.

As your business grows you may eventually reach the point where you can consider setting your own lines. But even when you reach this point you need to make sure you find the best possible people to do it.

Know your strengths and weaknesses so you can capitalize on your strengths and find the best available talent to cover your weaknesses.

I’m going to share a secret used by local bookmakers to increase their profit on a consistent basis.

When you find the lines from the big sportsbooks they’re set with a national or global audience in mind. These books are good at setting lines that encourage close to equal action on each side.

Though most lines set by professionals do an amazing job of predicting final score differences on average, they aren’t set to do this. They’re set where the experts predict they’ll split the bets.

Local teams are always bet more heavily than other teams, so when you offer contests with the local teams you should always move the line against them.

Most of your bettors are locals and most of them will have the local teams as their favorites. This leads many of them to bet on the local teams because they can’t judge the games logically. I know seasoned sports bettors who still always bet on their favorite team every week.

You’ll need to learn how much you can get away with over time, but most local sportsbooks don’t move them as much as they could.

The Alabama NCAA football team has been a contender every year for a number of years. They have one of the largest fan bases in the US and are favored in almost every game they play.

If you owned a sportsbook operation in Alabama you should adjust the lines against the team every week.

• If the national sportsbooks had the following line:
  • Georgia Tech + 19 at Alabama
• You should set your line at:
  • Georgia Tech +21.5 at Alabama

You may lose a few bets from bettors who compare lines and have another option for placing a wager, but you won’t lose many. And the ones you do lose would only unbalance your exposure on the game anyway.

Even with the extra 2.5 points, the odds are strong enough that you’re going to have too much action on Alabama anyway. You might even end up moving the line more as bets come in.

This same thing can and should be done for your local teams no matter where you’re located.

How Much Vig Do You Charge?

The standard vig charged depends somewhat on the sport involved, but 110 to 100 is probably the best place to start.

Most sports bettors are familiar with this and it’s not so much that it runs off business.

It also locks in a solid profit margin if you can balance your bets.

If you take $11,000 on both sides of a contest at 110 to 100 you lock in a $1,000 profit. On the side that you lose the punters get back their $11,000 and a $10,000 profit. You collect the $11,000 from the other side and use $10,000 of it to pay off the side you lost, leaving the extra $1,000 for profit.

If you only charge 105 to 100 the same amount of bets mean $10,500 on each side, and you only have $500 in locked in profit.

It’s rare that you’re able to have an exact split on games so you have to use the long run to make a profit. Some games you lose money and some you win.

The higher vig gets you into profit quicker and protects you to some degree on your losses.

You can run specials from time to time offering lower vig, but I don’t recommend doing so often. The best time to do this is when your action is lower than normal. The week after the Super Bowl is a prime example of a time when you might experience a lower handle than other weeks.

Laying Off Bets When You’re Overbooked on One Side

As you learned earlier, if you can keep the amount of money bet on both sides of a game close to even then you can lock in a profit.

But what happens if almost all of the action is on one side of a contest?

Of course, the first thing you do is move your lines, but sometimes even this doesn’t work.

The secret until you get big enough to ride out these problems is to have somewhere that you can lay off bets to bring your books closer to even.

When you lay off bets you basically place bets with another sportsbook. When you do this it basically reduces your risk, but you give up potential profit by doing so.

You’ve taken $11,000 worth of bets on a contest, all at 110 to 100, but $8,800 of it is on one side. That leaves only $2,200 on the other side.

Of course, the perfect scenario is if you had $5,500 on each side.

You have enough reserves and are comfortable carrying a $3,300 difference on your books, so you need to figure out what to do with the other $3,300.

All you have to do is place $3,300 worth of these bets at another sportsbook or group of sportsbooks at the same line or better than you took them.

The perfect situation is if you can place them at 105 to 100 and/or at a better line. But even if you can only place them at 110 to 100 and at the same line you offered you’ve made a break even play and reduced your exposure.

You need to make sure you aren’t breaking any laws when you do this, but it can be beneficial to form an agreement or two or three with other sportsbooks that makes it a mutual practice to check with each other when this happens.

No one needs to take bets they can’t afford to hold, but often you can find others who may be able to help. If you can work together you could even offer each other reduced vig in a scratch each other’s backs type of agreement.

The goal is to eventually get to a point where you have enough money behind you that you can rely on the long-term edge of your vig and accurate lines to make money. But until you reach this point you need to find a way to lay off bets when you get too much action on one side of a contest.

How Do You Keep Track of Everything?

The easiest way is to use a computer system to track all of your bettors and all of the bets and payouts. You can find a number of systems available.

You can back up all of your data on a flash drive that fits in your pocket and you can quickly track profits and losses with just a few clicks of the mouse.

One thing that some sportsbooks do is use a computer that isn’t attached to the internet in any way. When the computer isn’t connected to the internet it can’t be hacked or accessed by anyone who isn’t sitting at the actual computer terminal.

Remember That It’s a Business

This may seem like a strange thing to include, but you must remember at all times that a sportsbook is a business. You need to run it like a business if you want to make money.

This means that you need to track every penny that comes in and goes out of the business, know every expense that you have and are going to have, pay your taxes, and keep complete control of everything.

If you’re willing to run your sportsbook like this and operate in a smart and safe way then it’s one of the safest investments you can make. Sportsbooks don’t go under unless they make big mistakes. The biggest one is being under-capitalized like I mentioned in the first section.

If you have enough money behind you, set good lines, and keep your action fairly close to balanced you’ll make money consistently.

But if you start getting lazy and stop running it like a business you can quickly lose control.

When you start making money it’s easy to let things start to slide and enjoy some of your profits. But smart business owners keep up on what’s going on in their business.

You can hire good people to help you, but you should know your numbers at least on a daily basis. And you should never let go of writing all the checks. If you have to write the checks you know exactly how much is going out and where it’s going.

If you see something that doesn’t look right you can take action. If someone else takes care of the checks they may never notice a problem.

I’m not talking about payouts made to winning punters. This should be systemized and made as automatic as possible. But you should also check it often to make sure that a leak hasn’t happened.

But every other payment made from your sportsbook for anything should come directly through you. If you aren’t willing to make this commitment you shouldn’t be in business.

Always Collect Up Front – No Credit

If you want to open a bank you should open a bank. It happens to be one of the most lucrative businesses you can own.

But if you run a sportsbook, you aren’t a bank.

Banks loan money and give credit.

You might think that you’ll lose customers if you force them to always pay for their bets up front, but the truth is that the only customers you lose are the ones that you don’t want.

If you start accepting bets on credit you’re going to end up chasing down money, attracting more of the wrong kind of bettors, and losing money.

The profit margins are good in a sportsbook that’s run the correct way, but they’re also small in comparison to the amount of money that gets run through the business. So even if you can’t collect as low as 1 or 2% of the credit you give it can put a large dent in your profit.

Don’t ever make an exception to this rule.

Always collect up front and never let anyone place a bet on credit.

How Do You Handle Growth?

You may think this is a strange question, but you need to have a plan for growth.

Of course, when you start your own sportsbook you want to grow, but you need to ask yourself the following questions.

• Do you know what you need in your business as you start to grow?
• How do you take bets and make payouts?
• If you have employees at what point will you need to hire more?
• As your amount of bets grows you need to plan on having more cash reserves. Are you tracking your numbers so you know what percentage of bets you need in reserve?

Growth is a good thing as long as you plan ahead. If you grow too fast it can cripple your business if you’re not prepared.

You can do things that control growth, but if you limit the number of bets you take you may drive away customers. But you have to keep a healthy balance of control in order to keep your financial footing safe.

I mentioned the size of bets you’re willing to take in an earlier section. It’s one of the best ways to regulate growth.

Don’t make the mistake of expanding your accepted bet amounts too quickly. As a rough rule of thumb, you don’t want any single bet to be more than 10% of your daily handle. 5% or less is even better.

As you grow and understand your average handle you can use it to adjust your maximum bets.

Lower minimum bets may be a pain because they don’t offer the same profit as larger ones for the same amount of work, but the punters who make small bets are some of the worst at picking winners.

I’m not saying you should take $1 bets, or even $5 bets, but your minimum bet should be no bigger than $20. You want to encourage bad punters to place bets with you. Collectively they’ll make up a good share of your long term profits.

What Do You Do About Sharps?

The fact is that a small percentage of sports bettors are able to win consistently. These are often called sharps or sharp sports bettors.

They usually make up less than 5% of your customers, but it’s important to track your bettor so you can figure out which ones might be sharps.

How To Start Your Own Sportsbook

Once you learn which one are consistent winners you need to decide what to do with them.

It’d be nice if you simply didn’t take their action, but depending on their influence this can hurt your sportsbook. Of course, it’s your book so you don’t have to accept a bet from anyone you don’t want to.

If you decide to continue taking wagers from sharps you can do a few different things.

1. When they make bets consider adjusting your lines because they found a reason to think that the line had value.
2. Reduce the maximum bet you accept from them.
3. Lay off a large portion of their bets as often as possible to protect the rest of your handle.

One mistake many sportsbooks make is deciding a bettor is a sharp too quickly. If you have enough bettors flipping a coin a few of them will show profits for a long time.

Consider the following example to see why you shouldn’t label someone a sharp too quickly.

How To Run A Sports Book

If you start with 1,024 people flipping a coin to pick a contest, 512 will win.

If those 512 flip a coin for the next contest 256 of them will win.

When those 256 flip a coin, 128 win the following contest.

If those 128 flip a coin, 64 of them win the fourth straight contest.

64 flip again and 32 are winners.

Of these 32, 16 are winners for a sixth straight time.

When these 16 flip, eight are winners.

At this point, you have eight punters who’ve won seven straight bets and all they’ve done is flip a coin. They don’t have any skills, but the nature of each contest being effectively a 50/50 proposition makes it look like they’re sharps.

If you continue with the example, four people win eight straight, two win nine straight, and one wins 10 straight games.

You need to evaluate every bet they made, especially in relation to how everyone else bet the same contests. If they make up a large percentage of your handle on their side of the games they bet you may want to consider taking action.

The top 2% or so of sports bettors are extremely smart and understand that sportsbooks are trying to figure out who they are and work to make this difficult.

They often employee other people to place bets; sometimes using many different ones across a range of sportsbooks in order to get large amounts of money down on a game.

This can make it almost impossible to figure out, especially because even the best sports bettors still only win less than 60% of the time.

The only thing you can do is track the results of every sports bettor you service and try to get an idea over time of their profitability.

The Biggest Challenge

Your biggest challenge is the same as most nosiness; finding customers.

You need to have an effective marketing plan that directly leads to new customers.

Word of mouth is still the best way to attract new customers, so what can you do to get your current customers to bring you more business?

The first thing is to take good care of your current customers. Process payouts quickly, make it easy to place bets, and do anything else you can think of to offer the best customer service as possible.

You could offer a referral bonus to your current customers when they introduce a new bettor to your service. This could be a free bet, cash, or a reduced vig on their next bet.

You could run advertisements offering a free bet or reduced vig on their first bet for new customers.

Advertisements can be run in the local newspaper, on radio and TV, and using direct mail. You might use an ad in a magazine about sports that local people read.

One big thing you can do is help every bettor and potential bettor feel that their money is safe. Bettors don’t want to worry about being paid when they win.

It’s important to find out about the local banking laws so you don’ get into trouble, but one unique trick you can use is to offer a small amount of interest on any amount bettors leave in your sportsbook to bet on future games.

If you offer a half percent per month on their average daily balance you’ll be amazed at how many of them leave more money with you.

Another way to do something like this without needing to be worried about banking regulations is to offer a rewards program based on the total amount bet per month.

You could offer a quarter percent back on total bets, not including the vig, every month, or offer 1% back on monthly total losses.

Recognize that this is the same as offering a lower vig, but it sounds better. It sounds like they get a loss rebate every month.

And you can even force them to use the money to place more bets. Even if you don’t make the bet with the rebate, almost all of them will.

Anything that you can do to increase the bets and spread goodwill can help you get new customers and keep the ones you currently have.

Is It Legal?

This is a question that only you can find the answer to. It depends on where you live for the most part, and in some areas whether or not you can qualify for a license.

You can find legal and licensed sportsbooks in many countries and in some places online.

To learn more about the legalities of operating a sportsbook where you live you should contact an attorney, preferably one that works in the gaming industry, and see what you can learn from the government websites.

You’ll find in most places that sportsbooks are legal the process has more to do with the fees to get started and the taxes than anything else. In some ways, this is good, because it means if you’re not a criminal you can probably just throw money at the situation and be in business soon.

The bad news is that the easier it is for you to get started, the easier it is for your future competition to get started.

You can also find thousands of small sportsbooks, often called bookies, operating around the world seemingly with impunity even where it is illegal.

The reason so many people are willing to take bets where it isn’t illegal is that it’s such a profitable business and most of them operate for years without being hassled by the authorities.

This doesn’t mean it’s safe, and it doesn’t mean that they won’t eventually serve jail time.

My advice is if you want to start a sportsbook to do it somewhere that you can do so legally and acquire the proper license and whatever else you need. This can be expensive to get started, but the bottom line is if you run a sportsbook the right way it always makes money in the long run.

But only you can decide how you want to operate.

Should You Start Your Own Sportsbook?

How To Start A Sports Book

Now that you know how to start a sportsbook you need to decide if you should.

A sportsbook is a business competing in a competitive marketplace. But if you follow the advice on this page it can be a profit generating machine for years and years.

If you have the cash and can get into business without legal issues and are willing to work the business the right way there’s little reason to avoid it.

I assume you don’t have any ethical reasons that may stop you from starting a business like this or you wouldn’t be reading about it.

But you do need to be aware that a certain percentage of the population will consider you evil and some of them may even attempt to hurt your business.

At the end of the day, only you can decide if you should start your own sportsbook. You have all the information you need to make an educated decision.

Conclusion

Owning a sportsbook isn’t for everyone, and it can’t be done legally in all areas. But if you have the resources and can get one up and running it’s a great way to make money.

Well run and properly funded sportsbooks don’t often fail. They represent as close to a sure thing as you can find in the business world.

Use the information on this page to learn how to start your own sportsbook and see if it’s the right thing for you. Or, if you’d rather learn by doing, we recommend visiting sportsbetting.ag.