In a book I just read (to hopefully avoid the whole spoiler issue, I won’t mention which one) a character who time travels into the past raises funds by making bets on sporting events with bookies - getting long odds on underdogs he has the benefit of knowing will win.
He wins big, and this upsets the bookies to the point where they retaliate violently against him - as if they lost big money themselves - but don’t bookies primarily match up gamblers on both sides (calculating the odds based on how much money people are willing to put up on each particular side) and make their money by taking some sort of fee off the top, rather than (generally) betting their own money?
Yes, bookies make money on the spread, but unlike large stock and derivatives dealing businesses, they set and reset the odds based on “open interest” and the deals they’ve made to date…and if someone repeatedly bets, and wins but never loses, large money on underdogs, this is an unusual circumstance and can lead to bookie losses depending upon how the make the odds.
As I understand things, bookies try to “balance” their book in such a way that no matter what they have to pay out, they end up with a profit. They do this by setting various odds (or point spreads) to entice gamblers to play a certain side, and by changing the odds (etc.) as they take money in on various sides. If they’ve done their math correctly as time passes, they will end up paying out less than they took in, and they will profit. It doesn’t always happen, but a good bookie will ensure that it happens the vast majority of times.
So, a bookie doesn’t really care who wins, or how big; as long as he has balanced his book and gets a profit. What he does care about are gamblers who call in bets and don’t pay the stakes they wagered.
If a bookie is taking a fee off the top, he’s running a pari-mutuel book. That’s slightly different, in that he is letting the odds set themselves arithmetically rather than him setting them. (This is how racetrack betting operates.) But even then, the bookie is making a profit the vast majority of times, regardless of what he has to pay out.
From my understanding there are two types of bookies. One offers floating odds. You place a bet now and the final odds are only calculated when all bets are in and they know how big the prize pool is. This means the bookie can’t lose. For example you could place a bet now when the odds on a horse are 10:1. Before the race there is a lot of betting on this horse so the odds drop to 5:1. If you win, you’ll only get 5:1, despite betting when the odds were higher.
Others offer fixed odds. You bet now and you’re locked in at 10:1. Even if the odds change before the race to 5:1 you’re still at 10:1. If someone comes and places a large bet the bookie won’t be able to find someone to offset it. On things like sports matches it’s not so hard to do as there are only two teams, and you can adjust the odds to make one team more attractive. On a horse race, where there are 10+ horses and the total betting pool might be less than $10,000, someone placing a large bet can have a huge impact.
At least in Australia, all of the bookies at the race tracks used to offer fixed odds. This stopped them from ripping off their customers by advertising good odds then dropping them at the last minute. Now larger gambling companies such as TABCorp and UNITab are taking over and offer mainly floating rate betting.
This is a plot point in the excellent sf/fantasy novel
Replay by Ken Grimwood, except the bookies don’t get mad at him or try to put the hurt on him, IIRC - they just refuse to take any more bets from him after he becomes fantastically wealthy with his (already knowing the outcome ahead of time) bet on a World Series.
IANA gambler. Never placed a bet with a bookie. Placed a few while in a sports book casino but nothing that was more than the cost of the hotel room.
What you refer to as “floating odds” is para-mutual betting which how horse racing works. On the gambling side, the track can’t lose. You don’t really know your odds until the betting has stopped. You find out after the race is won when the results are posted.
With a bookie, usually the odds you bet at (called “the spread”) holds until the contest is decided. The spread may move as money is bet on either side. The bookie tries to even things out. The winner pays a “vig” to the bookie. I think it’s about 10% of the winnings. That’s where the bookie’s profits are.
As to the OP, maybe there is something in the novel whereby the way the bets were placed the bookies didn’t have enough time to change the spread to shift the spread enough to get offsetting bets. In other words, the bet gets placed at the last minute and not enough comes in for the bookie to cover it. He takes a loss and is really torqued off.
Realistically, it would seem that the bookie would just quit accepting bets from the guy. Like a casino, word would go around that the guy was somehow cheating and the player would have trouble finding a bookie to take the bet. But again, that story isn’t very interesting, is it?
The first thing I would think of in fiction involving bookies is: are those honest bookies or related to the Mafia? Because at least in half, if not more, of fiction bookies are using money from the Mafia or other organized crime to launder or otherwise rack up. So winning big on outsiders would either mess up the quotas, or the winning payout would come from the Mafias money, and thus they would get angry.
How does parimutuel betting work with longshots? Isn’t it much more difficult to find someone to bet $1000 on the chance of winning $1 than the other way around?
That’s not a long shot - it’s a favorite. Longshots, where very few people are betting on them,will have odds like 40 to 1 because most people are betting on other horses. Your $2 bet will net you $80. You DO have to wonder about the psychology of people betting the favorite at something like 5 to 4. Except in very high profile races where they are possibly looking for a souvenir or a collectible, and won’t cash the ticket.
(BTW, uncashed winning tickets are called “outs”. The track keeps the money.)
My point is this: Is it necessarily the case that, in parimutuel betting, for every one person betting on a longshot (getting 1000:1 return, say) there is someone betting against that longshot (getting 1:1000 return)? I doubt that’s the case.
I was under the impression (perhaps false) that bookmakers would take on the risk of longshot bets themselves, just giving extremely punitive odds. For instance, William Hill has taken bets on the existence of intelligent alien life and other silly topics; I figured that they just assumed the risk themselves. Is it actually the case that other betters are picking up the other side of the risk?
FTR, this is generally how horse racing is bet on in the US. Obviously the Dope’s home is Chicago but I don’t think every question should be assumed to be about america.
Even in america I don’t think it’s all paramutual; I had to do horse racing software for a chain of american betting shops, and they wanted both paramutual and fixed odds setups.
No, of course not. Basically, the money taken in on all bets is pooled, and paid out to the winners. That’s a simplification, but it’s still the basic idea. So the guy winning on a 1000 to 1 longshot is getting the money from lots of people who made other bets at various odds.
You’re assuming only two possible outcomes. Parimutuel betting isn’t usually used for two-outcome propositions where one outcome is overwhelmingly more likely.
In the example of a horse race, while one horse may be 100-to-1 (via parimutuel betting), there are 8 or 10 or 12 possible outcomes because there are that many horses running. The longshot is 100-to-1, but no horse is 1-to-100.
The OP understands the basics of the bookmaking business. But even if a bookie is making a profit, it doesn’t follow that he’ll nonchalantly pay off players he’s leery of. Bookies expect that longshots should only pay off now and then. If a LOT of gamblers start winning on longshots, they get suspicious.
Bookies EXPECT that, over the long run, a FEW clients will make a small profit, a few will break close to even, and most will lose a ton. But if any ONE client wins big regularly, alarm bells go off in the bookies’ heads. They KNOW that nobody wins big regularly, unless he’s cheating or has some kind of inside information.
So, if I win big once in a blue moon, no bookie will fret over it. But if I win big on a bunch of major longshots, bookies are going to get suspicious. They’re going to ask around about me, they’re going to find out from colleagues that I’ve taken THEM for big bucks too, and they’re going to be extremely displeased.
It’s no different from a guy who wins big time and time again at the roulette wheel. Casino bosses know that, over the long run, NOBODY should come out way ahead consistently at roulette. If somebody does, something stinks, and they’re going to want to get to the bottom of it.
And you don’t want guys with Mob connections mad at you.
The industry collectively does a pretty good job of matching up gamblers on all sides, but this doesn’t always filter down to the individual local book.
For example, before this season started, the Chicago Bears were 40-1 shots to win the Super Bowl. The gambling industry as a whole could be pretty confident that those odds would attract about 2.5% (ignoring vigorish) of the betting public to bet on the Bears. The industry as a whole is indifferent to who actually wins the Super Bowl, because they will pay out about the same amount of money in all cases.
But, a smaller local operation may not attract enough action to balance out the wagers in a 30-sided proposition. And, they can’t deviate too much from the Las Vegas odds without driving away customers. So, the local book may find itself with 4% or 5% of its action on the Bears. Now, if the Bears actually win, they’re on the hook for twice the expected payout.
The sensible thing to do, in that case, is to lay off a portion of the Bears wagers with a larger book, to hedge. By analogy, small insurance companies buy reinsurance from larger companies. But, if the bets come in very late, this may not be possible.
So, tips for time travellers: Bet well in advance, and with the largest bookmaking operation to which you have access. And, lose once in a while to avoid the issues of which astorian speaks.
