How Bookies Make A Book

In Australian horse racing, most punters bet with bookmakers all their lives without ever learning how a bookie makes his book, and it is hard to beat a man at a job you cannot describe. Statsman, writing in Practical Punting in August 1986, builds one from the inside: twelve runners sorted into three groups, a 10%-12% mark-up on the race, 4%-5% out for taxes and costs, and a net profit of between 7%-8% that is never meant to arrive on any single race. He may lose on a meeting, Statsman says, but he will win over 52 meetings.

What you'll learn:

• The key principle of making a book — two of the 12 runners with strong prospects, five with moderate chances, five with little or no chance — and prices offered so that no matter which horse wins, he makes a profit
• Betting round and over round: holding, say, 100 units and being up for paying out the same amount whichever horse wins, against holding more than 100 units for every 100 he has to pay out — and the pricing move that gets him from one to the other
• What a bookie's sheet actually shows, column by column — his liability, his own stake, your stake, the running total he holds on each horse, the ticket number — and what the government takes off the top, which turns a $10,000 gross into $9,775 before a horse jumps
• Where the plan comes apart: a nice 112% book at the open that finishes at 109% and still leaves him a very small chance of winning the race, and the leading bookie who says he is lucky to make 2% or 3% a year