How Does a Sportsbook Make Money?

In its simplest form, a sportsbook is an entity that takes bets on various sporting events. When an event ends, the sportsbook pays bettors who correctly predicted the outcome of a contest and keeps the stakes of those that lost. The amount that bettors win or lose depends on the probability of a particular outcome and the type of wager placed.

In the past, many of these establishments were one-person bookmaking outfits known as “bookies.” Today, most operate as part of larger gambling companies and offer customers the ability to place wagers online or in person. Some operate only on major sports, while others specialize in eSports and even political and election-related events.

To make money, a sportsbook charges a fee, known as vig or juice, on losing bets. This fee is often 10% but can be higher or lower. It is a way to cover overhead costs, but it also allows the sportsbook to make a profit over time.

The other way that a sportsbook makes money is by offering odds that differ from the true probability of an event. This margin of difference, called the “vig,” offers the sportsbook a financial edge over bettors and helps them mitigate their risk by taking other types of wagers that offset those they have on their books.

Understanding how a sportsbook gets its edge can make you a savvier bettor and help you recognize mispriced lines. It can also improve your odds of winning by helping you understand which bets are worth making and which are not.