What is a Bookie?
Bookie is the slang term, or short version, of bookmaker. The term seems to indicate that a bookie is a single individual; however, it can represent one person, a group of people, or an entire organization that accepts, places, and pays off bets for gamblers.
When gamblers make wagers on sporting events such as horse races or football games, they do so through the services of a bookie. The bookie notes and places the wagers desired, and money is collected and distributed from losers to winners after the conclusion of the event.
A Bookie’s Responsibilities
The primary responsibility of a bookie is to place bets and then collect and distribute money that is lost and won. However, before a bookie can accept or place a bet, they first need to set a line, or betting odds. It is arguably the most important role of a bookie, because the odds determine the potential for profits.
If the odds are not set properly, the bookie, as well as the gamblers working with the bookie, can stand to lose a significant amount of money. The most successful bookies are typically those who are best at setting accurate betting odds.
Setting the Odds
When a bookie sets the odds, his job isn’t done. From the second the odds are publicized, and bets start to come in, the bookie must adjust the odds as more gamblers place bets. Up until the moment that the sporting event occurs or the race is run, he can adjust the odds to make sure they are in the best interest of the larger group of bettors, but also so that they stand to favor the bookie or “the house” – the person or organization accepting bets.
Too many bets or too much money wagered on one team increases the bookie’s risk of loss; the goal is to create as much balance as possible so that, no matter what the outcome is, the bookie still stands to turn a profit.
Legality of Bookmaking
The legality of bookmaking depends widely on the country. Some countries make bookmaking illegal outright, while others allow it, but tightly regulate it. In other countries, bookmaking is under little, if any, regulatory scrutiny.
For example, bookmaking has been legal in the United Kingdom since 1961 and actually acts as a substantial contributing factor to the British economy, especially with a recent increase in interest in international sports and gaming.
In the United States, bookmaking has been, by and large, illegal, with Nevada as the notable exception because of the Las Vegas influence. Up until recently, the U.S. Supreme Court has upheld the Professional and Amateur Sports Protection Act of 1992, which acted as the legal foundation for preventing individual states from allowing bookmaking. However, in May 2018, in a 6-3 ruling, the country’s highest court struck down the law, leaving the door open for more states to decide to allow bookies to operate.
The term bookie carries a somewhat negative connotation, specifically when linked to organized crime. However, people who enjoy gambling see nothing wrong with their existence. Nowadays, bookies are less frequently individuals and more often business organizations, such as the sports book at a casino. While the issue of legality is firmly established in some countries, the future for bookmakers remains uncertain in others.
CFI is the official provider of the Financial Modeling and Valuation Analyst (FMVA)™ certification program, designed to transform anyone into a world-class financial analyst. To keep learning and developing your knowledge of financial analysis, we highly recommend the additional resources below: