How bookmakers work

A bookmaker is a person who carries on the business of receiving or negotiating bets. A bookmaker offers fixed odds about the outcome of an event, such as a horserace. Should the customer win, he or she will receive their stake multiplied by the odds, plus their stake. If they lose, they forfeit their stake to the bookmaker. When constructing a 'book', a bookmaker assesses the chances of each outcome in an event e.g. in a ten horse race, the bookmaker assesses the chances of each horse winning. Odds can be expressed as percentage probabilities. For instance, 6 to 4 is effectively saying that a horse has a 40% chance of winning. From a mathematical perspective the probabilities of all outcomes on an event should sum to 100%. Bookmakers make a profit by adjusting the odds offered so that the percentage exceeds 100% (i.e. the 'perfect' 6-4 may become 5-4 or 11-8). This difference is called the 'over-round'. Bookmakers do not 'win' on every race, as this would require the weight of punters' money to be proportional to the odds on offer. Bookmakers will 'hedge' if they have excessive laibilities by backing horses with other bookmakers.

Bookmakers provide their services at racecourses ('on-course bookmakers'), off-course Licensed Betting Offices (LBOs), often referred to as 'betting shops', and via the telephone or the internet. Betting shops are allowed to trade from 7am to 10pm during April, May, June, July and August. The rest of the year they can open between 7am and 6.30pm.

On-course bookmakers operate in betting rings at each of the 59 racecourses in Great Britain. On-course bookmakers are required to comply with the National Pitch Rules, administered by the National Joint Pitch Council. The choice available to racegoers in betting rings and the ease of making price comparisons ensures competitive odds which are offered, through starting prices (SPs), to punters wanting to back horses in betting shops.