What Is a Sportsbook? The Basics Explained

Depending on who you ask, a sportsbook could be a sports betting website, a company, a building, or something else. All of these can be true, but what is a sportsbook exactly?

Read on to learn about the many aspects of this business, including how sportsbooks operate, whether (and where) they are legal, what types of sporting events they cover, and more.

The Sportsbook Definition in a Few Words

Most people use the term “sportsbook” to refer to a venue, either a website or brick-and-mortar building, that accepts bets on sports. Thus, a sportsbook is the same as a bookmaker (bookie), since their purpose is the same.

You can bet on an individual athlete or team through a sportsbook; aside from regular sports events, sportsbooks often also allow betting on politics, fantasy sports, esports, etc.

History of Sportsbooks

Not so long ago, sportsbooks were illegal across the US. Things started to change in 1992 when the Professional and Amateur Sports Protection Act (PASPA) was passed. However, this act only allowed four states to legalize sports betting and operate bookmaking businesses: Delaware, Montana, Nevada, and Oregon.

The act allowed punters to wager on different sports. Up to that point, horse races, greyhound racing, and jai alai were the only sports people could bet on.

Due to legal sportsbook unavailability, an illegal sportsbook market developed, and offshore sportsbooks followed when internet adoption became worldwide. Many bookmakers were part of organized crime gangs, while others served only a narrow circle of bettors, mainly consisting of their family, friends, and other confidants.

The breaking point occurred in 2018, when the authorities ruled the ban on sports betting unconstitutional. From then on, federal laws regulating gambling allowed each state to legalize sports betting under its terms. As of 2022, Utah and Hawaii were the only US states that still considered all forms of gambling illegal, including sports betting.

Popular Sportsbook Sport Bets

Nowadays, there are many legalized sports betting opportunities, on both major sporting events and minor-league competitions. For example, sportsbooks accept bets on professional and college sporting events in:

• Golf
• Tennis
• Boxing
• Soccer
• Hockey
• Football
• Baseball
• Basketball
• Mixed Martial Arts

Moreover, you can place wagers on political elections or popular events, including Oscar awards. So, you can find many different opportunities to bet on, depending on the particular sportsbook.

How Does a Sportsbook Work?

If you’re wondering how sportsbooks work, note that they always have a commission on your bets and, in the case of online sportsbooks, betting rules and restricted countries. Let’s dive in and see how this business works and what you should know before placing a money line bet on a sporting event or anything else.

Betting Rules

The goal of sportsbooks is to generate profit. To do that, they set a rule about laying bets so they can collect funds from losing bets. The commission bookies get from lost bets is known as the vigorish (vig).

To ensure income, whatever the game outcome, sportsbooks accept wagers on either side of the contest. Then, they pay bettors who win from the losses of those who bet on the opposing team.

Now, let’s answer the question: “How do sportsbooks work?” in detail.

The Handicap Ratio

Sportsbooks typically require gamblers to wager $110 or $120 to win $100; some discount sportsbooks only require gamblers to bet $105 to win $100, but this is rare. This ratio applies to bets of all sizes, whether they are worth $550 or $11.

So, sportsbooks handle most bets by requiring you to lay a $110 bet to win $100. If you bet that particular amount, you’ll get your $110 back and $100 if you’re lucky, $50 if you bet $55, and so on. In the long term, this handicap guarantees sportsbooks a return.

Now that you know the basics, let’s see how this works on a massive scale.

How Does Commission Work in Practice?

This section answers the question: “How do sportsbooks make money?” in detail.

Let’s say that 1,000 bettors put a wager on a basketball game. Of that, 500 put money on the home team, while the other 500 take the away team. Each bettor places $110, so the bookmaker collects $110,000 in total. The bet winners get their original $110 back plus an extra $100, while the losers obviously don’t get anything.

So whichever team wins, the bookmaker will pay out $105,000 in total to the 500 people who bet on them. The other 500 people who bet on the losing team would not receive any money. The bookmaker would still profit $5,000 because they originally collected $110,000.

Types of Bets Sportsbooks Handle

There are four common types of wagers in the sports betting industry, and these are:

Totals

Totals, also known as over/under bets, are among the most popular sports bets. They pay off if competing teams’ scores are over or under the predicted total. The goal is to get equal wager amounts on both contested sides and create a 50-to-50 chance to win.

Let’s say you think a specific sporting event will end with a very high score, and you place a wager of “over 50 total points.” You win your bet if the game has a total score of more than 50 points. If it is 49 or less, you lose your bet.

Spread Bets

Sportsbooks offer spread bets that allow you to predict the outcomes of the games and set a point spread. The team they place their bet on must win by the minimum number of points or score a minimum number of points. The handicapper sets the minimums.

With this type of bet, those betting on the underdog can still win even if the team loses, as long as they gain a certain number of points over the course of the game. Similarly, it’s not enough for the favorite to just win – they have to win by a certain lead for those betting on them to cash out.

Here’s an example of how these betting lines work:

Let’s say you wager on the Ravens against the Patriots in the NFL. The Ravens are listed as nine-point favorites, so you would need them to win by more than nine points for your bet to pay off. If they only win by eight or fewer, or if the Patriots win the game, you would lose your wager.

However, if the Ravens happen to win precisely by nine points, then it is a push, and your bet is refunded. On the other hand, if the Patriots lose but gain enough points, those betting on them might still win their wager.

Proposition (Prop) Bets

Physical and online sportsbooks allow you to bet on any random event during a game with the prop bet. This could be something as simple as how the coin toss will fall. Also, it could be a bet that requires some skill, like predicting who will score the first touchdown or how a specific player will perform.

Moneyline Bet

The moneyline bet depends on the likelihood of a particular team winning. If you bet $110 on the team that is likely to win, for example, the amount you may get if a favorite wins can be $20. But if you bet the same amount on the underdog that isn’t likely to win, you could get $200 if they win.

Now that we answered “What is a sportsbook?” and “How do sportsbooks do business?” let’s see whether all bookies are legal and how to choose a good one.

Sportsbook Legality

The supreme court allowed US states to legalize sports betting in 2018. Still, the legality of sportsbooks largely depends on their physical location, since states have different laws when it comes to gambling. Some of them, like Nevada, have allowed all sorts of gambling and sports betting for decades (since 1949) and New Jersey (1979, when citizens voted to allow gambling in Atlantic City). Most others only recently started to legalize it.

Some don’t seem to want to join: Utah and Hawaii authorities outlaw all forms of sports betting. Furthermore, the Wire Act of 1961 bans interstate gambling, so it might be tricky for punters to use an online bookie that isn’t located in their state. Moreover, even if one sportsbook operates in different US states, it has to comply with the regulations of the particular state the bettor comes from.

Because of this, you’ll be subject to geo-location verification when accessing an online sportsbook, i.e., your whereabouts will be detected through your IP address to ensure you’re located in an unrestricted state.

If your state isn’t among US states whose laws allow sports betting, you can travel to Las Vegas or a neighboring state where placing sports bets is legal to test your luck.

How To Choose a Sportsbook

There are a few factors you need to consider before investing your money into sports gambling, and the best approach would be the following:

1. Browse different bookmakers to choose a reputable one. You can find legal sports betting opportunities by reading reviews and testing each bookie before placing your money. Customer protection and responsible gambling are a few pros provided by sportsbooks that are legal.
2. Most brick-and-mortar and online bookmakers set similar bet rules. Still, try to find one offering even slightly more favorable odds, because the difference could be substantial down the line.
3. Even though sportsbooks may have various sports for betting, some may offer many more different markets for the same sport. For example, if you are a basketball fan, you might wish to bet on other leagues besides the NBA.

How Much Do Sportsbooks Make?

The answer here depends on various factors – available sports betting options, the handicap, the number of punters, and so on. Still, bookmakers with over 100 consistent customers can expect to earn $100,000 a week.

Most states don’t advertise related data publicly, even if they have them. Only Nevada offers some insights related to legal betting: Bettors that conducted the legal wager bet $3,82 billion in 2012, $3,96 billion in 2013, and $4.25 billion in 2014. 39% of punters gambled on football, 24% on basketball, 17% on baseball, and 14% on racing.

Bottom Line

Now that you know what a sportsbook is and answers to related questions, such as “Is a sportsbook the same as a bookmaker?” and “How to find a legal bookmaker?”, you can start searching for betting options. It would be best to find a reputable bookie, with the most favorable odds before testing your luck.

And remember – research where you can enjoy sports betting legally, gamble responsibly, and don’t wager more money than you can afford to lose.