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Every transaction is based on the relationship between the stake and the odds. Bookmakers make money by paying out less in returns than they take in stakes.
A book is created with a theoretical profit margin which means in theory the bookmakers have an edge. The cost of betting is the margin bookmakers apply to a set of odds.
These odds change due to basic laws of supply and demand. This basic economic model is more relevant with exchange betting which brings together backers and layers at a price that suits both parties.
Historically there was one form of bookmaking whereby customers bet on an event to take place and that was the only option. In the last 25 years innovations have created two other types of betting.
The three ways of betting are described below:. A bookmaker or turf accountant takes bets, generally on sporting events but also in other areas such as politics and entertainment at agreed odds.
The art of bookmaking involves setting and adjusting odds to guarantee a profit. The aim is to balance financial transactions whichever outcome takes place.
This is the theory of bookmaking but in practice the outcome of an event will determine if or how much profit accrues to the bookmakers at the odds agreed with the client.
Bookmaking in licensed premises has been legal in the United Kingdom since and before then bets were legally placed usually by telephone using a debit account.
Bookmaking is generally illegal in the United States though some states are now an exception and in some countries the only legal bookmakers are owned and operated by the state.
The UK has the most mature industry but betting in other countries, especially in Europe, has become regulated in line with the growth of online gaming.
Organised bookmaking first took place in the UK in the late s and internet gambling first appeared in Spread betting has grown significantly in the UK over the last 25 years.
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