I’m not a bookie but my understanding is it works something like this.
To simplify things, let’s say all bets have to be $100. If you pick the winning team, you get $190.
Now let’s say I’m a bookie here in western NY. And let’s say this week’s big game is between the Seahawks and the Broncos. I get 2000 people to place bets so I collect $200,000. And this week, 1000 people are betting on each team. So if Seattle wins I pay out $190,000 to the 1000 people who picked Seattle and if Denver wins I pay out $190,000 to the 1000 people who picked Denver. Either way, I pocket $10,000.
Now it’s next week and the Bills are playing the Texans. I once again get 2000 people placing bets and collect $200,000. But this week, I had 1600 people betting on Buffalo and only 400 people betting on Houston. Great news if Houston wins because I only have to pay out $76,000. But if Buffalo wins, I’ll be paying out $304,000. Not a good situation for me.
So I call up my old friend Irishman, who’s a bookie in Texas. We commiserate and he tells me he’s in the same situation only he has 400 people betting on Buffalo and 1600 people betting on Houston. So I say, “Hey, here’s what I’ll do. You know those 1600 Bills bets I got for $100 apiece? I’ll pay you $95 apiece to take 1200 of them.” And you agree.
So I pay you $114,000 to take 1200 of the Buffalo bets. I now have $86,000 left from my original $200,000 and I have 400 Buffalo bets and 400 Houston bets. If the Bills win I pay out $76000 to 400 people and if Houston wins I pay $76000 to the other 400 people. Either way I still make my $10,000.
Meanwhile, you’ve now got $314,000 (the original $200,000 you got from your local betters plus the $114,000 I paid you). And you’ve now got 1600 Buffalo bets (your original 400 plus the 1200 I sold you) and 1600 Houston bets. If Buffalo wins you’ll pay out $304,000 to the Buffalo betters and if Houston wins you’ll pay out $304,000 to the Houston betters. And like me, you pocket $10,000 either way.