The bookmaker has a very dicey role to play in the whole system of sports betting. He is responsible for the whole gambling market to stand. He also acts as a middleman between the races and the gamblers. At any cost he has to be prepared for any result. A bookmaker operates on a binary level. A team can either win or lose. The bookmaker does not only collect wagers for the win of a particular team. He also collects wagers for the win of other teams, or so to speak, the loss of this team.

Thus the bookmaker collects wagers for both the win and the loss of a team. We can safely say that the bookmaker collects wagers on behalf of both the winning and the losing team. When he accepts these wagers, he tries to maintain a uniform spread over the both the sides. This ensures, that no matter whichever team wins, the bookmaker avoids losses and makes a neat profit.

This equal spread is maintained by means of a uniform distribution of the total amount. It is assumed that the total amount wagered is equivalent to each side. If it is not absolutely equal then it is ensured that it is at least within a certain percentage of equality. If this is not the case, then it results in an imbalance, that is the difference between the wining and the losing section becomes prominent. This results in a sort of exposure. This is termed as event risk. At all costs, bookmakers try to avoid this kind of event risk.

So you will always find bookmakers adjusting their prices to counter the imbalances in the two sides. This is also a form of arbitrage. This method is applicable to single events. But in most cases the bookmakers offer bets on multiple events all at once. In this case they try to maintain that a single event should not attract a betting amount that will be equal to the total amount of capitalization of the bookmaker.

But the bookmaker has to think of other ways to maximize his profit. He can do this in a variety of ways. For instance, there is a team which is not a favorite but because it is popular, so a lot of people are betting on it. Then the bookmaker sets the price at a high level. It's just the law of Economics. When demand increases for a given piece of commodity, price rises. This helps the bookmaker to earn a high profit.

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