There was someone who spoke of a bookmaker analogy in an "options edge" thread and was clearly told that he was wrong. Oh, wait it was me. Maverick. It appears that you do understand the true game. Interesting posts!
Mav, I'm not sure if my small disagreement here is with you or Wiki. I agree with virtually everything said in the post except the excerpted portion. In my experience smart bookmakers -- and most are not smart -- are like smart market makers. They not only see order flow they regard order flow as an important asset that they capitalize to increase their return. BTW ... the bracketed portions are not for your benefit but are for those who lead a more exemplary life than we have ... lol. Best example if he's quoting a pitchers line (the bet is only on if both pitchers start) and he's making the Yankees 1.30 over Boston (you need to wager $1.30 on the Yankees to win a dollar) and he see those few guys he has that sharpen their pencil with a razor blade he does not care that the 20 and 40X betters are providing enough action to balance his book. He wants to fade stupid money and align himself with the more sophisticated betters. Since he knows he rarely balances exactly he anticipates that he will have an "extension" one way or the other. He moves his line to Yankees 1.25 to stop any more smart money from taking Boston and encourage a few more Yankee bets he can fade. On any given Sunday he will "bet" a portion of the vig he collects by extending on a three, four games ... sometimes more, sometimes none. The good guys goose their take by a pretty penny over the course of the year by managing extensions (positions) but they know the main gig is taking the middle; they do not get greedy or foolish. Probably one and the same. Meanwhile the bad bookmakers bury themselves because they don't extend a percentage of their take into positions (say 50 or even 100% on a given game and 20 to 25% of a days take) they extend 200% of the days take rationalizing that since half of it is customer money the line they are getting is too sweet to pass on. They also think it is about handicapping rather than reading order flow and, since they don'y have any sharp customers, their order flow is all 20 timers and crap as an indicator. Both he and his brother-in-law (the former trader) end up drinking cheap booze in a crummy joint with ugly girls trying to figure out where they went wrong. I find they invariably blame either the pitcher or the ump!
I have some experience with book makers. OK, I have a lot. I use to bet heavily in college. Bookies lay their spreads off in Vegas or other book makers. There is no inside info or playing against dumb money. Bookies make a spread where they get the most two side action. When the action gets too heavy on one side, they move the line until they find takers to take the other side. Most bookies take 10% of your winnings. This is NOT the spread, but more like a commission. Once he has is bets, he lays the other side in Vegas so you could say he is hedged. These guys absolutely clean up. I knew a kid in college that made over 250k a year running a small operation out of his dorm. Free money. But he was pretty big in a big college town.
I was a dime baseball better in high school, Mav. Stick to your prop conversation. You are an industrial league player in this area. You simply have no clue as to what you are talking about. It is like the guy who buys a few mutual finds thinking he understands how the equity markets work. You are on the wrong playing field. It is a straight spread game with all principal transactions. Commission? You must be thinking of baccarat ... lol. In my part of the world we knew that at 14.
Do you have any idea how much a guy has to be holding on a game before he has to go outside of NYC to lay it off? There are small -- and maybe some midsized -- countries that have GNP's that are are smaller.
Swan, I use to bookie a little myself. I charged a 10% rake on the winnings. I got that 10% from every winner on every bet every time. That's the math. I actually layed off my spreads against a bigger bookie on campus. I had about 5 to 10 clients (my friends). LOL
I never made a dime on the line. I called my bookie ahead of time and he gave me his lines. I quoted the exact lines he gave me to my friends. Even when the lines moved, he honored the lines he gave me ahead of time. Honor among bookies. LOL. BTW, this was for college and pro football.
Swan, no bookie with an IQ over 50 is going to not charge you a rake to make a bet. I would never give a line to a guy if I wasn't going to make money on it. Would you? Bookies are not like market makers. You don't earn the spread. The only way a bookie can make money on a spread is if he middles it. Do you have any idea how hard that is? He would never make a single cent in profit yet he would have all the risk when one of his clients doesn't pay. Think about it man. Me and my roommate probably laid 500k in bets on college and pro football when I was in college. At our peak, we were laying down decent size on any given weekend.
If I recall, the bookies liked to help their odds a bit with some points shaving. At least I thought there were indictments against refs for making a couple of key calls a game. Of course that kind of stuff never happens in the trading game because the regulators are always watching carefully. 1987 changed the market makers methods forever. Their game is different and requires much more capital to survive. (In one thread, I was accused of not knowing how much capital MMs need. So I asked and got an answer. I was quite surprised at the small size needed to earn a decent living. )