Bookmaking

The general role of the bookmaker is to act as a market maker for sports wagers, most of which have a binary outcome: a team either wins or loses. The bookmaker accepts both wagers, and maintains a spread (the vigorish) which will ensure a profit regardless of the outcome of the wager. The Federal Wire Act of 1961 was an attempt by the US government to prevent illegal bookmaking.[1] However, this Act does not apply to other types of online gambling.[2] The Supreme Court has not ruled on the meaning of the Federal Wire Act as it pertains to online gambling.

Bookmakers usually hold a 11-10 advantage over his/her customers (for small wagers it is closer to a 6-5 advantage) so he/she will most likely survive over the long term. Successful bookmakers must be able to withstand a large short term loss. (Boyd, 1981)

Many of the leading gambling bookmakers from the 1930s to the 1960s got their start during the prohibition era of the 1920s. They were often times decendents of the influx of immigrants coming into the USA at this time. Although the common stereotype is that these bookies were of Italian decent, it has been proven that many of the leading bookies were of eastern European Jewish Ancestry. (Davies, 2001)