The difference that makes or breaks you business.

The sportsbook Industry is booming. These Multi Million dollar companies are now raking in more and more players with each passing season. The promise of same day payouts, 24 hours a day, 7 days a week servicing, ridiculous cash bonuses on 1st and all deposits made for cash customers, 1st half,  2nd half  and quarter lines on virtually any game on the board, Props on major events, online access and online casinos,  online poker rooms. All these “goodies” seldom make it a fair game for the local onshore bookmaker (agent) making it virtually impossible to compete against these Corporate Beasts.

Or is it?

Any one who is anyone in the bookmaking business knows that’s since the beginning of time there have always been Bookies.  As the sportsbook industry grew and went offshore; in a futile attempt to take in all the action from cash or post up to Credit customers, many of these books started putting welcome mats for any onshore bookie with any number of players (that is also referred to as “package”) to be in on the action taken by the books. The sportsbooks wised up and offered Outsourcing for the local bookmaking. How this came to be, started out with a simple but yet unfair method for the local street corner guy. The idea was basically to rent out the service provided from the off shore book to the agents players, but this was done under a very high price.

It was a simple method. I am the offshore book. I have invested thousands of dollars to set up shop off shore. I put in the software, the networking, the numerous phone lines, the staffing, and the marketing team. The works. But my business is exclusively Post up or Cash Customers.  Now I want to dip my finger in the market held by the local onshore bookie. These guys hold only credit customers and due to the relationship, trust and confidence they have built with their customers I can not take em. What do I do? I open my doors to the local bookie. I provide his customers with the 24 hour service, the 1st half, 2nd half and quarter lines for any game; I give them horses, online access, online casino, and 1st class Customer service. What do I want in return? Same thing your ex-wife wants from you…..HALF! I want 50% of the profits made by the bookie on a per week basis.

Not quite the bargain of a life time is it?

But most onshore bookmakers where obliged to go for that offer. Many offshore books started opening up their own Credit Accounts and the local guys started losing their players. So instead of losing customers, they took the 1st thing that they ran in to. They knew that they could not possibly compete with the off shore industry. The odds where in the favor of the book. If the agent was lucky, he could sometimes break a deal with the company in question and bargain out maybe a 40-60% split or maybe a 35-65% split allowing the agent to keep the majority of the profit made.

But this was not the train of thought of all the Sportsbooks out there. Some respected the work done by the local bookie and considered it as the milestone of their achievements. They thought that they could not break the Bettor-local bookie relationship which has been around since the early 1800’s. So instead of giving it a head on attack, they approached it with a new way of outsourcing their business.  They introduced the Price per Head Agent Solution. This offered to the local Bookmaker to basically rent out the service provided by the off shore book and to keep his profits in full, under the payment of a reasonable fee. This fee was based on a price per the number of players that the agent had in his/her package. That fee was established by the off shore bookmaker and allowed the agents players to have the same use and rights of the generic Cash customer. The sportsbook even handled the accounting portion and player profiles placed by the local bookmaker himself. The only exception from the Cash customer and the Credit player was that the collection of winnings and paying off the players was handled exclusively by the agent. The only money that exchanged hands from the book and the agent was the Price per Head fee. Nothing more.

This option became more and more attractive within the betting circles for the onshore bookie. The benefits offered by the Off shore PPH service provider where more than clear. Their profit margin would increase significantly vs. the split profits method used at first, it decreased the legal exposure for the agent and his players, and the benefits that the agent’s players received where numerous.

And with the growing nationwide interest of the local onshore bookmaker also came more offers from more Offshore PPH service providers, and the Split Profit Option became obsolete.

In an effort to get a second opinion on the preference of PPH over Split profits, I approached on of the Line Mangers. His thoughts:

“The Split profit Method is old school. That is when the books thought they could actually take over that market by taking half of the agent’s profits in a vain attempt to break the local guy. Nowadays books have wised up. They know that is one part of the industry that will remain out of their grasp. Although, there are one or two books who still stick to the split profit methods and agents who seek them. Reasons...Well mostly because the agents, who still use the Split profits, also split the Losses with the book. They can go for 30-70% the agent eating up the majority of the losses. handles the losses, they still continue to take a significant part of the profits.  And let’s be frank about it, for you as an agent, if you have enough money to cover your players and you know they aren’t big winners, you rather pay the price per head and keep all the profits for yourself. But on the other hand, if you don’t have the money then you rather do split profits; although you won’t rake in the full amount of the winnings you might split the losses with the house, if you’re lucky. I still stand to believe, however, that the PPH agent solution is better for agents because they keep 100% of the profits. It also protects books form agents walking away with the money and players trying to collect from the house. And it’s sure money for the house on weekly basis. It is a fixed income from the agent to the book week to week.”