How Sportsbooks Make Money
The typical way that a sportsbook makes money is from a commission, mainly referred to as ‘the juice.’ If everything were fair and even, the bets on both sides of the equation would be even. What does that mean?
Here’s an example:
1. Green Bay Packers +2.5
2. Arizona Cardinals -2.5
Let’s say you and your friend were betting each other in this contest, and you each put up $50. If you had the Packers and won, they’d pay you $50. If they had the Cardinals and won, you’d pay them $50. That’s even, right? But when it comes to sportsbooks, they’re willing to take whatever side of the bet you don’t want to take – they do that with every customer – and then their only goal is to get even action on both sides of the line. Using the example above, if they had around $100,000 in bets on the Packers, their goal would be to get $100,000 on the Cardinals. In football, most sportsbooks put the lines at -110 and take that ten-cent juice. If that’s the case, then it doesn’t matter to them who wins because with even money on each side, they’ll pay out the winners with the losing side’s money, minus the commission.
Here’s a clearer picture:
1. $100,000 on the Packers at +2.5 -110 = $90,909.09
2. $100,000 on the Cardinals at -2.5 -110 = $90,909.09
So now you’re thinking to yourself: how does the sportsbook attract equal money on each side? The answer is that it’s supply and demand. If the sportsbook sees lots of money coming in on the Cardinals at -2.5, that indicates that bettors feel there is value there. To respond to that demand, the sportsbook will raise the price on the Cardinals, moving the line to +3 or +3.5. At this point, bettors might reevaluate and think, ‘hey, there’s actually value on the Packers now’ and bet on that side. As the money comes in on the Packers, the line will adjust accordingly. As a result, betting lines are similar to a stock price that fluctuates, and the key is for the sportsbooks to find a line that splits the action.
So What’s The Big Deal With Middling?
To middle a bet is something bookmakers never want to see because it means they lose both sides of the equation. Let’s revisit the example above: if both the Packers and the Cardinals bettors won, then the sportsbook could stand to lose about $181,818.18 without winning anything. That would be a massive loss.
Here’s how it could happen:
Let’s say that the sportsbook opens the Cardinals at -2.5, and bettors feel that it’s a great price to bet them. So they start piling in at -2.5, -3, -3.5, -4, -4.5, -5 and -5.5. At this point, the line now sits at -5.5, which is a three-point difference from where it starts. Let’s say you’re a smart bettor who put down $100,000 on Arizona at -2.5; now you can bet $100,000 on Green Bay at +5.5 and have a three-point window where you would win both bets. Let’s say Arizona won by three, four, or five; you would win both bets. That is called middling.
Betting sites have to be very accurate with their opening numbers, or they could become vulnerable to this strategy. Sometimes there is little they can do as news might break during the week – a quarterback injury, inclement weather or other factors – that force a significant change in the line. Let’s say Arizona opened -2.5 but their starting quarterback suffered a concussion in practice. Now the line might be Green Bay -2.5, but for those who bet it early, they could have a window to middle the bet and win both sides. Sportsbooks are very cautious with this, as this type of situation is one of their worst positions.