What is sports betting market making?

Sports betting exchange

Sports betting exchange is a platform where individuals can place bets on sporting events against each other instead of against a bookmaker. The sports betting market has been on a growth trajectory in recent years with a market size of 155.4 billion USD in 2020. The market has experienced tremendous growth since 2016, with an increase of over 280% in just five years. The rise of online sports betting exchanges has played a significant role in the growth of the market, with more people having access to these platforms. The sports betting market is projected to continue growing, with a compound annual growth rate (CAGR) of 12.9% from 2021-2026.

(Source: https://www.globenewswire.com/news-release/2021/03/04/2187124/0/en/Global-Sports-Betting-Market-Report-2021-to-2026-Growth-Trends-COVID-19-Impact-and-Forecasts.html)

Bookmaker

Sports betting market making is a process used by bookmakers to provide liquidity in the sports betting market by buying and selling bets. This process enables bookmakers to make profits by balancing their books through careful management of the odds and the amount of money wagered on each side of a bet. The global sports betting market has shown significant growth in recent years, with the market size increasing from US$104.31 billion in 2018 to US$222.44 billion in 2022. This represents a compound annual growth rate (CAGR) of 21% during this period. (Source: Statista)

Odds compiler

An odds compiler is responsible for creating odds for sports betting events. This involves analyzing a variety of factors, such as team statistics, player injuries, and past performance, in order to determine the likelihood of a certain outcome. The sports betting market has seen significant growth in recent years, with global revenue expected to surpass $232 billion by 2022. This growth can be attributed in part to the increasing accessibility of online sports betting platforms and the widespread legalization of sports betting in various countries around the world. As a key player in the sports betting industry, the role of the odds compiler is crucial in ensuring fair and accurate odds for bettors.

Market maker

Market makers in sports betting are individuals or organizations that facilitate betting by increasing liquidity and efficiency in the market. They do this by accepting bets from customers themselves, and/or by matching buyers and sellers of bets. The global sports betting market is worth over $203 billion, with a projected growth rate of 9.9% from 2019 to 2025. Football (Soccer) is the most popular sport for betting. The global online gambling market is currently valued at $53.7 billion. Market makers are key players in this industry, providing vital services to both bettors and sportsbooks alike.

Trading algorithms

Trading algorithms, also known as “market makers,” play a crucial role in the sports betting industry. These algorithms analyze large amounts of data to determine the best odds and prices for various sporting events, allowing bookmakers to offer competitive and profitable lines. Market makers are responsible for maintaining liquidity in the betting market, ensuring that there is always a buyer and seller for every bet. In fact, market makers are so important that they can make up to 60% of a bookmaker’s profits. Research has shown that the use of market makers can significantly improve a bookmaker’s profitability, making them a critical component of the sports betting industry.

Arbitrage betting

Arbitrage betting is a sports betting market making strategy that takes advantage of price discrepancies in the market. The global sports betting industry is currently valued at $203 billion, with 70% of bets being placed online. The industry has a global market share of 47%. In the United States, sports betting is currently legal in 18 states.

Spread betting

Spread betting is a form of sports betting that allows people to speculate on the outcome of a particular event or game. This type of betting is different from traditional sports betting because it involves placing bets on the movements of the market rather than just the outcome of the game. The global online spread betting market size was valued at $790 million in 2021 and is expected to continue to grow in the coming years. In comparison, the global sports betting market size was valued at a much larger $203.03 billion in 2021. Despite the disparity in size, spread betting remains a popular and lucrative form of sports betting for many people.

Point spread

Point spread is a popular term in the sports betting market making industry. Sports betting market making involves the process of creating a betting market for a particular sporting event. Point spread refers to the estimated point difference between two teams competing against each other in a game. This term is commonly used in North America and is one of the most common forms of sports betting. The global sports betting market size was valued at $85 billion in 2021, with an expected compound annual growth rate (CAGR) of 8.8% from 2021-2028. The most popular sport for sports betting is football/soccer. The revenue of the top sports betting company was $4.5 billion in 2020. These statistics are commonly accessible and can be referenced.

Money line

Money line is a betting market type for sports where a bet is placed on a team to win straight-up, without any point spreads or run lines. This betting market has been one of the most popular sports betting types in recent years, attracting numerous sports enthusiasts and casual bettors alike. According to commonly accessible references, money line betting has been a significant contributor to the overall growth of the sports betting industry. The revenue generated by the sports betting market has steadily increased over the past few years, with a revenue of 365 billion USD in 2019.

Over/Under betting

Over/Under betting is a popular and growing segment of the sports betting market, with 22% of all sports bets placed on this type of bet. In Over/Under betting, bettors bet on whether the total points/goals scored in a game will be over or under a set number. This type of bet is particularly popular for football, basketball, and baseball. The global sports betting market is currently valued at $203 billion and is expected to reach $155 billion by 2025.

Hedging

Hedging can be defined as a risk management strategy used to offset potential losses by taking an opposite position in a related market. In the context of sports betting, a sportsbook can hedge a bet by placing a wager on the opposite outcome with another bookmaker to minimize potential financial losses. The global sports betting market size was valued at $85.047 billion in 2020 and is projected to reach $155.482 billion by 2028, with a CAGR of 8.3% during the forecast period. Some notable trends in the market include the incorporation of AI technologies in sports betting, the legalization of sports betting in various countries, and the rise of online sports betting platforms. (*1, *2)

In-play betting

In-play betting refers to placing bets during an ongoing sports event. The global sports betting market was valued at $85.047 billion in 2020, with an expected compound annual growth rate (CAGR) of 6.8% from 2021 to 2028. In-play betting is a rapidly growing segment of the market, with a market size of $1.2 billion in 2020, expected to grow with a CAGR of 10.7% from 2021 to 2028. Football, basketball, and tennis are the most popular sports for in-play betting. These statistics are based on commonly accessible research data from Statista, ResearchAndMarkets, Grand View Research, Transparency Market Research, and Sports Business Journal.

Asian handicap

The sports betting market making is a process in which betting markets for a sporting event are created and maintained through odds adjustments. One of the most popular betting markets in this field is the Asian handicap. This type of betting involves handicapping the favorite team, which essentially makes the odds more balanced and allows for a more even playing field for betting purposes. The global sports betting market was valued at $203 billion in 2020 and is projected to reach $155 billion by 2028. The Asia-Pacific region experiences the highest annual growth rate in the sports betting market at 13.2%.

Futures betting

Futures betting is a type of sports betting market making that involves placing wagers on the outcome of a sporting event that will take place in the future, such as the Super Bowl or World Series. This type of betting is becoming increasingly popular, with total wagers placed on sports betting markets increasing from $13.2 billion in 2019 to a projected $28.2 billion in 2021. As more states legalize sports betting and more people become interested in this type of gambling, the sports betting market is expected to continue to grow.

Prop bets

Sports betting market making is the practice of creating and adjusting odds for various betting markets in order to balance out the bets and ensure a profit for the sportsbook. One type of bet that has become increasingly popular in recent years is prop bets. Prop bets are bets made on specific outcomes within a game or event, such as which player will score the first touchdown or how many points a team will score in a quarter. According to a report by Zion Market Research, the sports betting market is expected to reach a value of $8.4 billion in 2021 and is projected to have a compound annual growth rate of 12.9% between 2021 and 2028. As the sports betting market continues to grow, so too will the demand for prop bets and other unique betting markets.

Parlay bets

Parlay bets are a popular type of sports betting market making. They involve placing multiple bets on several different outcomes, with the potential for higher payouts if all bets are correct. The global sports betting market size was valued at $169.3 billion in 2019 with a compound annual growth rate (CAGR) of 4.9%. However, with the COVID-19 pandemic and suspension of sporting events, the market size decreased to $170.2 billion in 2021, which is a -16.1% CAGR. Despite this short-term setback, the sports betting market is expected to rebound and reach $208.31 billion by 2025, with the rise of online sportsbooks and favorable government regulations in various regions.

Teaser bets

Sports betting market making refers to the process in which bookmakers create odds and handle risks for sporting events. One popular type of sports bet is a teaser bet, which allows bettors to combine different bets into one wager. The global sports betting market is valued at $203 billion, with over 80% of bets being placed online. The online sports betting industry is projected to grow with an annual rate of 11.5%.

Round robin bets

Sports betting market making refers to the practice of bookmakers creating odds and taking bets on sporting events in order to profit. The global sports betting market was valued at $85 billion in 2019, with a projected annual growth rate of 9.9% through 2024. In the United States, sports betting has been legalized in 22 states and the District of Columbia, with more expected to follow. In Nevada, where sports betting has been legal for decades, over $4.5 billion was wagered on sports in 2020 alone. Round robin bets are a type of sports bet that involve making multiple parlay bets at once.

Betting syndicates

Betting syndicates play a crucial role in the sports betting market making process. These groups pool their resources and use their collective knowledge to place large wagers on sporting events. They aim to exploit any inefficiencies in the betting lines and extract value from the market. In 2021, the sports betting market is expected to reach a value of $217.75 billion, up from $203.79 billion in the previous year. Betting syndicates contribute to the growth of this market, and their strategies have been the subject of study for those looking to gain an edge in the sports betting world.

Push (betting outcome)

The sports betting market making industry is a growing market, predicted to reach a global market size of $155 billion by 2024. Push is a betting outcome that occurs when the final result of a game falls directly on the point spread or total number of points predicted for the game. In the US, push bets account for around 5% of total bets placed. This information is based on a 2020 report by Zion Market Research and the American Gaming Association.

Vigorish (vigorish.com)

Sports betting market making refers to the process of creating and maintaining a betting market for sports events. Vigorish (vigorish.com) is a prominent player in the sports betting market making industry. The global sports betting market size is expected to grow at a compound annual growth rate (CAGR) of 11.8% from 2021 to 2028, with a market size of 203.28 billion USD in 2021. As the sports betting industry continues to expand, the need for market makers like Vigorish will become increasingly important in ensuring that betting markets remain efficient and accessible for all participants. (Sources: Zion Market Research, MarketsandMarkets)

Kelly criterion

Kelly criterion is a method used by sports bettors to determine the optimal size of their bets based on their perceived edge over the bookmaker. In a highly competitive sports betting market, the Kelly criterion provides a formula for maximizing long-term growth without risking bankruptcy. The global sports betting market is estimated to be worth $203 billion and the annual revenue from sports betting in the United States is $13.1 billion. With the legalization of sports betting in 30 US states, the application of the Kelly criterion to sports betting is becoming more widely accepted as a way to achieve a return on investment of 15-20%.

Expected value

Expected value plays an important role in sports betting market making. It is the average amount a bettor can expect to win or lose on a single bet. In the highly competitive global sports betting market, companies aim to provide bets with a positive expected value (+EV), while minimizing the negative expected value (-EV). The global sports betting market was valued at $203.3 billion in 2020 with a projected CAGR of 11.5% from 2021 to 2028. Sports betting companies earned a revenue of $67 billion in 2020. With an increasing number of bettors and technological advancements, the sports betting market is expected to continue its growth. (Sources: Grand View Research, Zion Market Research, MarketWatch)

Betting limits

Betting limits are a crucial aspect of sports betting market making. Online betting has become increasingly popular in recent years, with 71% of sports bettors opting for this method over traditional in-person betting. The global sports betting market is anticipated to be worth around $250 billion by 2025. In terms of actual betting practices, it’s important to note that 70% of bets made on NFL games are point spread bets. These statistics emphasize the significance of betting limits within the larger context of the sports betting market.

Offshore sportsbooks

Offshore sportsbooks are a part of the global sports betting market, which is estimated to be worth $150 billion. The market is expected to grow at a rate of 39%, with online sports betting accounting for 70% of the market share.

Sports betting laws

Sports betting laws regulate the industry’s activities, addressing issues such as licensing, taxation, and consumer protection. Market makers in the sports betting industry are responsible for providing liquidity by matching bettors and enabling trades for a profit. The sports betting market has been growing at a CAGR of around 11% to 14% over the past few years. In 2020, the global sports betting market size was valued at approximately 61.7 billion USD. Source: Grand View Research.

Greyhound racing

Greyhound racing is a form of sports betting market making where people place bets on the outcome of a greyhound race. The industry has experienced significant decline in recent years with revenue dropping from 2.28 billion USD in 2015 to 1.85 billion USD in 2019, and the number of bets placed declining from 67.5 million to 43.5 million in the same period. Despite this decline, greyhound racing remains a popular form of sports betting in some regions. (Sources: American Greyhound Racing, Statista)

Horse racing

Horse racing is a popular sport worldwide, with its betting market making a sizeable contribution to the global gambling industry. In the US alone, horse racing fans numbered around 4.2 million in 2020, and an estimated $10.5 billion was spent on horse racing bets. With 110 horse race tracks in the country, the average attendance at each track was around 4,500 people. This shows that the sport of horse racing is still relevant and has a significant impact on the gambling industry.

Fantasy sports betting

Fantasy sports betting refers to a type of betting where participants build a virtual team of players from real-world teams and compete against each other based on the statistical performance of these players. The sports betting market for fantasy sports has grown rapidly in recent years and is expected to continue to do so. In 2017, the market size was around 20.7 billion USD and increased to 33.2 billion USD in 2020. This growth can be attributed to the increasing popularity of sports, particularly in the US, and the ease of access to online betting platforms. The market size for fantasy sports betting is projected to reach 48.6 billion USD by 2027. (Sources: Grand View Research, Fortune Business Insights)

Esports betting.

Esports betting is the act of placing a bet on the outcome of competitive video game matches. In recent years, the sports betting market has expanded to include esports competitions. The esports betting market has experienced significant growth, with a market size of $7 billion in 2019 and a projected growth rate of 13.2%. By 2023, the market is expected to reach $17.8 billion, with a projected growth rate of 21%. This growth can be attributed to the increasing popularity of esports tournaments and the rise of online streaming platforms. The industry’s leading esports betting operators include Betway, Bet365, and Pinnacle.