How Sportsbooks Make Money

A sportsbook is a specialized service that accepts bets on sporting events. It is at the heart of many online gaming brands and often accompanied by a racebook, casino, live casino, and more. These specialized services allow gamers to place bets on up to 40 different sports from one website or app.

The recent legalization of sports betting in the US has renewed interest in understanding how sportsbooks make money. Although considerable attention has been given to the study of sportsbook odds setting and public wagering trends, the principles governing optimal wagering have received less attention. In this article, we show that the key decision faced by a sports bettor is which matches to wager on (i.e., those in which the sportsbook’s proposed spread accurately captures the median outcome).

In addition to determining whether or not the odds are favourable, we also analyse the probability distribution of the median margin of victory for each match. This provides insight into how accurate the sportsbook’s proposition is in predicting this outcome and helps bettors identify mispriced lines.

We also discuss the different products available from sportsbooks and how they can be used to create edges for bettors. These include moneyline bets, total bets, and point spreads. It is important to understand the various options in order to be able to recognize and take advantage of them. Having a deep understanding of how sportsbooks make their money can help bettors improve their profits and avoid costly mistakes.