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Tipico, Betway and Co .: Boom for EM: How do betting providers actually earn their money? | message

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, Tipico, Betway and Co .: Boom for EM: How do betting providers actually earn their money? | message, Forex-News, Forex-News

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, Tipico, Betway and Co .: Boom for EM: How do betting providers actually earn their money? | message, Forex-News, Forex-News

Sports betting in 2019 more popular than ever

Last Friday it was that time again: the long-awaited European Football Championship (EM) started into the group phase. The betting offices are also working at full speed again; after all, the providers are expecting high demand for sports betting throughout the tournament.

As the surveys of the German Sports Betting Association (DSWV) show, sports betting has been enjoying increasing popularity in Germany for several years. In 2019, the German sports betting market set a new record in terms of sales: a total of 9.3 billion euros were used in sports betting this year – this corresponds to an incredible increase of 21 percent compared to the previous year.

Betting offices rely on profit margins

Sports betting providers are also happy about this development. Sure, because the higher the demand for sports betting, the higher the turnover and ultimately the profit of the provider. But how exactly do bookmakers earn their money in sports betting?

Basically, betting portals such as Tipico or Bet365 generate their income from profit margins, which can be determined after the outcome of a game or a competition. An example should make this clearer:

Suppose a bookmaker estimates the odds of the two opponents in a football or ice hockey match as even and sets a betting odds of 1.8 for both parties. If sports enthusiasts now bet equally on their favorites, the provider’s profit margin is calculated very easily: If the deposits for the sports bet are, for example, 200,000 euros per team, the betting provider has to transfer 360,000 euros (200,000 * 1.8) to the successful tipsters . With a total of 400,000 euros in deposits, the bookmaker therefore has 40,000 euros in income – not a bad deal for the betting portal.

Determination of the betting odds

In order to find profitable odds for upcoming games, betting offices have to do a lot of arithmetic in advance, according to the betting advice portal Wettbasis: It is a matter of examining all relevant factors influencing the outcome of the game, such as the table placement of the two teams and the direct comparison. Even the current form of the players, injuries and the performance of the teams with home advantages are scrutinized by the employees of the betting portal. After a comprehensive analysis, the next step is to determine the betting odds.

For example, if you look at the betting odds of the provider Tipico in the run-up to the first European Championship game between Germany and France, the betting odds for France were 2.55. Tipico set a 3.20 quota for the draw, with a German win the correct tipster could look forward to a quota of 2.90. As explained by the betting base, the estimated probabilities of the betting offices can be seen from these odds. For this one forms the reciprocal of the betting odds.

Tipico estimated the EM game with the following probabilities: France wins the game 39 percent, Germany 34 percent, a draw is rated with a probability of 31 percent. If you add up the three probabilities of occurrence, you can see that they add up to more than 100 percent (104 percent). If the betting behavior is balanced, this results in a profit margin of four percent for the betting provider, and the payout key for the sports bettors is 96 percent.

Wage costs, rent and betting tax diminish profits for betting providers

At most betting portals, the general rule is: the greater a team’s role as a favorite, the lower the betting odds are, because the probability of making losses is of course higher for the betting offices. If the favorite teams do lose, the providers generate huge profits – these events in particular represent the main revenue of the betting portals according to the sports betting advice portal.

However, these earnings are not to be equated with the profit of the betting offices. Funds for wages, rent and marketing are still drained from the income generated. Betting offices have also had to pay the so-called betting tax since 2012. That means, five percent of the sales have to be given to the Federal Republic.

The problem: Due to the high competition among the now numerous online betting portals, the profit margins of the providers are often tight, and some betting portals find additional tax payments to be financially burdensome. Therefore, many providers pass the tax burden on to their customers. As sports betting comparison reports, betting portals such as Interwetten and Bwin deduct five percent from their profits if they bet successfully. The well-known sports betting provider Bet-at-Home also passes the betting tax on to its customers. However, according to sports betting comparison, there are also some providers such as Betsson or Mobilebet who take over their five percent levy themselves.

Pauline Breitner / Forex-news.com.net editors

Image Sources: Ohmega1982 / Shutterstock.com

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