bookmaker

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Bookmakers on a greyhound race course, Reading, UK

A bookmaker, or bookie, is an organization or a person that takes bets on sporting and other events at agreed upon odds.

Range of events

Bookmakers in the United Kingdom focus betting on professional sports, especially horse racing and football; however, a wider range of bets, including on political elections, awards ceremonies such as The Oscars, and novelty bets can also be placed.

Operational procedures

By adjusting the odds in his favour or by having a point spread, the bookmaker will aim to guarantee a profit by achieving a 'balanced book', either by getting an equal number of bets for each outcome, or (when he is offering odds) by getting the amounts wagered on each outcome to reflect the odds. When a large bet comes in, a bookmaker can also try to lay off the risk by buying bets from other bookmakers. The bookmaker does not generally attempt to make money from the bets themselves, but rather profiting from the event regardless of the outcome. Their working methods are similar to that of an actuary, who does a similar balancing of financial outcomes of events for the assurance and insurance industries.

Legality

Bookmaking may be legal or illegal, and may be regulated; in the United Kingdom it was at times both regulated and illegal, in that licenses were required but no debts arising from gambling could be enforced through the courts. Now, since the inception of the National Lottery, it is not only legal but also a small contributor to the British economy, with a recent explosion of interest with regard to the international gaming sector industry. However, gambling debts were unenforceable under English law until the Gambling Act 2006. Trusted legal bookmakers are members of IBAS, an industry standard organisation to settle disputes.

Bookmaking is generally illegal in the United States, with Nevada being a notable exception.^{[citation needed]}

In some countries, such as Singapore, Sweden, Canada, Hong Kong and Japan, the only legal bookmaker is owned and operated by the state. In Canada, this is part of the lottery program and is known as Sport Select.

United Kingdom gambling industry

The first bookmaker in the UK is considered to be Harry Ogden, who opened a business in the 1790s, although similar activities had existed in other forms earlier in the century.^[1][2]

Following the Gaming Act 1845, the only gambling allowed in England was at race tracks. The introduction of special excursion trains meant that all classes of society could attend the new racecourses opening across the country. Cash concentrated towards the bookmakers who employed bodyguards against protection gangs operating within the vast crowds.^[3]

In 1961, Harold Macmillan's Conservative Government legalised betting shops and tough measures were enacted to ensure that bookmakers remained honest. A large industry has grown since. At one time there were over 15,000 betting shops in the UK. Now, through consolidation, they have been reduced to about 8,500. The group of the largest bookmakers in the country, known as the "Big Three", comprises William Hill, Ladbrokes, and Coral.^[4]

Improved TV coverage and modernisation of the law have allowed betting in shops and casinos in most countries. In the UK, on-track bookies still mark up the odds on boards beside the race course and use tic-tac or mobile telephones to communicate the odds between their staff and to other bookies, but, with the modernisation of United Kingdom Bookmaking laws, online and high street gambling are at an all-time high, with a so-called Super Casino having been planned for construction in Manchester prior to the government announcing that this plan had been scrapped on 26 February 2008.

Internet gambling

With the arrival of the World Wide Web, many bookmakers have an online brand, although independently owned bookmakers often still maintain a "bricks and mortar" only operation and others operate a "skin" or "white label" operation which they purchase from one of the large firms as is the case with BetDirect and Betterbet. The main websites only accept bets from countries where Internet gambling is not prohibited, and from people over 18 years old. Often these websites are linked to online casinos. Controversially, the explosion in Internet gambling is being linked to an increase in gambling addiction, according to the UK's help and advice organizations for addicts, GamCare and Gamblers Anonymous.

Increasingly, online betters are turning to the use of betting exchanges such as Betfair and BETDAQ, which automatically match Back and Lay bets between different bettors, thus effectively cutting out the bookmaker's traditional profit margin also called an overround.

These online exchange markets operate a market index of prices near but usually not at 100% competitiveness as exchanges take commissions on winnings. True wholesale odds are odds that operate at 100% of probabilistic outcomes.

Betting exchanges compete with the traditional bookmaker. Not only are they generally able to offer punters better odds due to their much lower overheads, but also in giving opportunities for arbitrage: the practice of taking advantage of a price differential between two or more markets, although traditionally arbitrage has always been possible by backing all outcomes with bookmakers (dutching) as opposed to laying an outcome on an exchange. Exchanges do, however, allow bookmakers to see the state of the market and can set their odds accordingly.

Some bookmakers have even taken to using betting exchanges as a way of laying off unfavorable bets and thus reducing their overall exposure. This has led insecurity from some TABs in Australia, state-run betting agencies which attempted to deny Betfair an Australian license by running unfavorable ads in the media regarding the company. When Tasmania granted Betfair a license despite these efforts the Western Australian state legislature passed a law that specifically criminalised using betting exchanges from within the state; however, that law was later ruled to be unconstitutional.

Bets are also taken via phones, using SMS text messages, though poker and other sports are more suited to other media. As technology moves on, the gambling world ensures it is a major player in new technology operations.

Most televised sports in the United Kingdom and Europe are now sponsored wholly or partly by Internet and high street bookmakers, with sometimes several bookmakers and online casinos being displayed on players' shirts, advertising hoardings, stadium signs and competition event titles. Sponsors are especially highlighted in the football category since football fans present significant percentage of the target group the bookmakers serve. Many of the bookmakers are sponsoring some of the major football teams in the major European football leagues^[5], although Werder Bremen are currently fighting the German courts for the freedom to continue featuring bookmaker Bwin on their shirts, as Germany and France take action against online gamers.

With the recent banning of tobacco sponsorship, and the significant commercial budgets available to the gaming industry, sponsorship by car manufacturers, alcoholic drinks, soft drinks and fast-food marketers is being rapidly replaced by sponsorship by gaming companies in the Far East and Europe.

The United Kingdom Gambling Act 2005 introduces a new regulatory system for governing gambling in Great Britain. This system includes new provisions for regulating the advertising of gambling products. These provisions of the Act came into effect in September 2007. It is an offence to advertise in the UK, gambling that physically takes place in a non-European Economic Area (EEA), or in the case of gambling by remote means, gambling which is not regulated by the gambling laws of an EEA state.^[6]

The situation is more confused in the United States, which has attempted to restrict operators of foreign gambling websites accessing their domestic market. This resulted in 2007 in a ruling against the US government by the World Trade Organization.^[7]

See also

References

Further reading

• Cassidy, Rebecca (2002). The Sport of Kings: Kinship, Class, and Thoroughbred Breeding in Newmarket. Cambridge University Press.