Red Figures for Dummies

In the game of life, it is always smart to reward people who work for you because it gives them incentives to do a better job, and when they do a better job, then more money can be made for everyone. The pay per head business works similarly.

The biggest bookies in the business grow their business by having subagents work for them.

Subagents

Subagents are other people who know a bunch of other players and are willing to collect money from these players for you. The subagent becomes a middleman by bringing you more players and handling the payments when they are due.

The typical way this works in the pay per head business is by rewarding the subagent for the referrals and dealing with the payments by giving the subagent a percent of the losses. This percentage could be anywhere from 10% to 50%. When you, as the main agent, are the one that is responsible for all the losses, or as they say in the pay per head bookie business, you are the one bankrolling the whole package, then you often give a lower percentage to your subagent.

When you are the one bankrolling the subagent and are the one responsible for giving the subagent money to pay the players when the players win, then you would set your subagent onto a percent with a red figure. A red figure means that you only give your subagent his agreed-upon percentage when his group of players loses. If his group of players wins, then you are the one who is using your money to pay the players. This also means that you are not giving your subagent his percentage until his group of players loses back the money they won.

The best way to understand how the red figure works is with an example.

Suppose your subagent has 10 players who just started playing with you, and you agreed to give him 20% of their weekly losses with a red figure. So after the first week, this group of players won a combined $5,000, which would mean that you as the master agent would give your subagent $5,000 to pay the players, and your subagent would have a red figure of -$5,000 that his players would have to lose back for him to start making his 20%. Now let’s say the following week these players lost $7,000. Your subagent does not get 20% of $7,000, because you have to include the $5,000 that you had to pay the week before. As a result, the net overall loss of the players is $2,000, and that would be the amount that your subagent would get 20% off, which in this example would be $400.

Setting up red figures with your subagents is a great way to give your subagents an incentive to keep getting more players who lose. If they get players that win, then the subagents will constantly be in the red and will not get a percentage until their players lost back all their original winnings.

Furthermore, the concept of red figures is closely tied to the “hold,” which represents the percentage of total wagers the bookmaker expects to retain as profit. A bookmaker’s goal is to achieve a healthy hold, and managing red figures is crucial to achieving this. By balancing the betting action and minimizing potential losses (red figures), bookmakers can improve their hold percentage.

Consider the previous example. If Team B wins, the bookmaker profits $500 (the total bets on Team B). This profit contributes to the bookmaker’s hold. However, if Team A wins, the red figure represents a dent in the potential hold. Therefore, effectively managing red figures isn’t just about avoiding losses; it’s about maximizing the hold and ensuring long-term profitability.

Beyond adjusting odds and layoff bets, bookmakers also use sophisticated software to track and analyze betting patterns. This software helps identify potential imbalances and allows for proactive adjustments to minimize red figures. Understanding these patterns is essential for skilled bookmakers who aim to consistently generate profits. The ability to predict and react to betting trends is a hallmark of successful bookmaking operations.

How to Run a Bookie Operation?

Running a bookie operation, even a small one, involves more than just taking bets. It requires a blend of business acumen, sports knowledge, risk management, and customer service. Here’s a general overview:

1. Legal Considerations: Before anything else, research the legality of sports betting in your region. Regulations vary widely, and operating illegally can have severe consequences.

2. Setting Up Your Business:

• Financial Planning: Determine your startup capital and create a budget. Consider expenses like software, potential losses, marketing, and operational costs.
• Choosing a Business Structure: Decide on a legal structure (sole proprietorship, LLC, etc.) and register your business.
• Banking and Payment Processing: Establish secure and reliable methods for accepting bets and paying out winnings. This might involve offshore accounts or cryptocurrency processing, depending on your location and legal framework. Be aware of the risks associated with different payment methods.
• Software and Infrastructure: Invest in reliable bookmaking software. This software is the backbone of your operation, handling everything from odds management and bet tracking to player management and reporting. Consider cloud-based solutions for scalability and accessibility.

3. Odds and Lines:

• Understanding Odds: Learn how odds work and how to set them. Your odds determine your potential profit and attract bettors. You can use existing market data as a starting point, but you’ll need to adjust based on your own risk assessment.
• Line Management: Continuously monitor and adjust your lines based on betting patterns and external factors like injuries or news that could affect game outcomes. This is essential for balancing your book and minimizing your risk.

4. Player Management:

• Acquiring Players: Develop strategies for attracting and retaining bettors. This could involve marketing, referrals, or offering competitive bonuses.
• Customer Service: Provide excellent customer service. Respond to inquiries promptly and professionally. Building trust and loyalty is key to a successful bookmaking operation.
• Managing Player Accounts: Keep accurate records of player bets, wins, and losses. Ensure secure handling of sensitive data.

5. Risk Management:

• Balancing the Book: The core of risk management is balancing the amount of money wagered on each side of an event. If one side is heavily favored, you risk significant losses if that outcome occurs. You can balance your book by adjusting lines or laying off bets with other bookmakers.
• Setting Limits: Establish betting limits for individual players and events to control your exposure.
• Monitoring Betting Patterns: Use your software to track betting patterns and identify any suspicious activity, such as arbitrage betting or attempts at fraud.

6. Ongoing Operations:

• Financial Management: Track your income and expenses meticulously. Analyze your profitability and make adjustments as needed.
• Marketing and Promotion: Continuously promote your services to attract new players and retain existing ones.
• Staying Informed: Keep up-to-date on sports news, injuries, and other factors that can affect betting outcomes. The more informed you are, the better equipped you’ll be to manage your risk and set accurate lines.

7. Consider Working with a Pay-Per-Head Service: For many starting out, especially smaller operations, using a pay-per-head (PPH) service is a viable option. PPH services provide the software, infrastructure, and sometimes even the line management, allowing you to focus on acquiring players and managing your customer relationships.

Disclaimer: This overview provides general information and should not be considered legal or financial advice. Operating a bookmaking business involves significant legal and financial risks. It is essential to consult with legal and financial professionals to ensure you comply with all applicable laws and regulations and manage your business responsibly.

Ace Per Head is the Most Popular Choice for Bookies

Particularly those starting out or running smaller operations, for several reasons:

• Comprehensive Service: They offer a complete suite of tools and services necessary to run a bookmaking operation. This includes:
  • Sportsbook, Racebook, and Casino: A wide range of betting options to cater to different player interests.
  • Live Betting Platforms: Multiple platforms to engage players with in-play wagering.
  • Prop Builder: Allows players to create custom bets, increasing engagement.
  • Full Mobile and Tablet Support: Optimized for all devices, crucial in today’s mobile-driven world.
• Experience and Reputation: Ace Per Head has been in the industry for a long time (since 1998) and has a solid reputation. This longevity suggests they have adapted and remained competitive in the market.
• Focus on Customer Service: They emphasize their commitment to customer service, which is essential in the bookmaking business. Prompt and helpful support can build trust and loyalty with players.
• Reliable Technology: They invest in their infrastructure with redundant data centers and robust servers to ensure the platform is stable and operational, even during peak betting times.
• Customization Options: They offer customizable website designs and configurations, allowing bookies to create a unique brand identity and tailor their offerings to their specific needs.
• Ease of Use: They aim to simplify the process of setting up and running a bookie operation, allowing bookies to focus on player acquisition and management.
• Competitive Pricing: Their pricing structure is based on the number of active players, making it potentially cost-effective, especially for smaller operations.