The History of Bookmaking
Bookmaking has been around for a couple of centuries. The UK gambling industry generates about £14 billion every year. Moreover, the estimated global annual profit is £625 billion. These figures present an idea of sports betting’s financial value in the world today.
It’s had a bit of a rocky path, though. Bookmaking isn’t legal in every country, leaving affected punters finding alternative means of gambling on sports. Nonetheless, it’s undeniable that bookmaking ’s a lucrative industry, employing over 125,000 people in the last few years.
What is bookmaking?
Bookmaking is the act of establishing the best odds for sports markets while receiving and paying bets based on the outcome. The product of these services is the sportsbook, which is available either online or via land-based betting shops. Gamblers access sportsbooks to place wagers on their favourite sports teams or players.
The organisations that provide these services are bookmakers or bookies. You may also have heard of the term ‘sportsbook operator.’ It’s the bookie’s job to offer the best odds for pre-match and in-play markets while still ensuring a profit per wager.
Before bookmaking officially began
Sports betting existed long before bookmaking officially started. In ancient times, civilians would wager on the outcomes of gladiator matches or horse races in grand arenas. As with most systems, it developed over time from plain bets on the results to odds on various sports markets.
Even though wagering was a favourite pastime, there was no official ‘booking’ method or systematic tracking of potential scenarios. Players would simply place bets on who would win, or, in the case of fatal matches, who would survive. However, the world of sports betting changed in 1795 when the world saw the first act of bookmaking.
The start of bookmaking
Horse racing was a new sport that took off in Britain in the early 1700s. Horse race betting was as simple as wagering on which horse would win. As the sport rose in popularity, several racecourses were constructed to accommodate the new demand.
Becoming dissatisfied with the limited betting options, Harry Ogden started working on a new gambling system. He opened his new business at the New Market Heath track in Suffolk County. It offered a fresh way of wagering on horse races, with odds on different probabilities rather than one final result.
The system he developed was exceptional. For the first time, gamblers could decide on which eventuality they wanted to bet, with the odds represented as fractional. Moreover, Ogden realised that he could earn money from bookmaking by including a profit margin with each bet.
Many bookmakers appeared after Ogden established the new betting system. The industry thrived, with bookies showing up at racecourses and sports events. New odds and wagering possibilities became available as the sports markets grew.
However, it was only in 1960 that the first official bet shops opened. It was a direct result of the Betting and Gaming Act established that same year. The British government, under the guidance of Prime Minister Harold McMillian, legalised the operation of betting shops under this new law.
Over 15,000 gambling shops opened up in the first ten years. It’s uncertain who the first bookmaker was to open the first bet shop. Many online sources state that William Hill, Coral, and Ladbrokes dominated the British market, with Paddy Power holding the Irish betting industry.
The rise of online bookmaking
With the rise of technology and the birth of the internet, it wasn’t long before online gambling made an appearance. The advent of online gambling made it possible for punters to wager from the comfort of their homes, instead of standing in long queues. Furthermore, it provided a means to compare various odds online instead of relying on the local bet shop.
The Free Trade & Processing Act, established in Antigua and Barbuda in 1994, permitted remote casinos to provide gambling services online. Intertops created the first online sportsbook in 1996. The Kahnawake Gaming Commission regulated it, becoming the first organisation of its kind.
There were hundreds of bookmakers available on the internet by 1998. Further advancements saw the introduction of mobile betting with live streaming. With more development underway, it won’t be long before augmented, and virtual reality is available for sports betting.
History of bookmaking laws
While technology and bookies have indeed revolutionised the gambling industry, laws have also had a significant effect on the evolution of bookmaking. You’ll have a better understanding of the history of bookmaking once you grasp how laws have affected bookmaker operations. Historically, these laws either advanced or hindered the growth of the industry.
First laws on gambling
Religious institutions were the first to issue doctrine on the sins of gambling, stating that it would buy the gambler a one-way ticket to hell. This warning didn’t stop punters from betting on sports. Wagering became a main-stay of European culture.
In 1190, King Richard I of England and King Phillip of France established the first official gambling laws. While bookmaking wasn’t available then, these laws would cultivate the betting industry going forward. It specifically detailed who was allowed to gamble, indicating the punishment for those who disobeyed.
During the late 1600s, gambling on pub arcade games, horse racing and cricket became popular. Gaming Acts came into play in an attempt to regulate the working class. However, betting activities continued well into the 1800s.
1845: Gambling Act
No set rules governed the activity when Ogden established bookmaking in 1795. Therefore, punters freely gambled on sports events using this new system. This lack of regulation also meant that bookmakers could cheat gamblers out of their money and vice versa.
Due to the growing concern around gambling, the House of Lords established a committee to deal with the betting regulation. This resulted in the 1845 Gambling Act. While the law didn’t prohibit bookmaking, it did ensure that bets became legal contracts.
1853: Betting Act
Since the 1845 law effectively didn’t prohibit gambling, bookmakers saw this as an opportunity to expand. Gambling houses appeared nearly everywhere. It seemed as if there was even less control over the wagering industry than before.
This rise in betting houses caused the 1853 Betting Act to come into effect. It forbade bookies from using their properties or homes as places to gamble. Unfortunately, it meant that off-track betting was no longer allowed. However, the new law saw a rise in ‘street gambling’, since the bookies had to move their activities off their properties.
1960: Betting and Gaming Act
While greyhound and horse racing grew in popularity, gamblers became increasingly dissatisfied that they could only wager at racecourses. It often led to shady back-alley deals or illegal bets. Moreover, bookmakers wanted to offer sports betting from their properties again.
Harold McMillian was the English Prime Minister at the time. Through him, the British government put the 1960 Betting and Gaming Act into effect. The new law permitted the establishment of bet shops, which revolutionised the world of bookmaking.
However, it also had an adverse effect on horse and greyhound racing. Since gamblers no longer needed to go to the track to bet, attendance at the races ebbed. Many experts believe that this is the main reason why small racecourses closed down and that this foreshadowed the end of the greyhound era.
2001: Change in bookmaking tax law
For the subsequent 40 years, the gambling acts became more lax, reducing some of the regulations. Punters in the UK were also on the receiving end of a gambling tax during that time. It meant that they had to pay a percentage of tax, based on how much they wagered.
In 2001, chancellor Gordon Brown requested that the UK government review the tax law. English bookmakers opted to move overseas simply to avoid the regulation. When the revised regulations appeared, it taxed the bookies rather than the gamblers. While this made many punters happy, the bookmakers increased their profit margins to cover the new taxes.
2005: Gambling Act and Commission
After the 2001 Tax review, the government decided that it was best to incorporate all gambling and bookmaking laws into one act. It required a single regulatory authority to govern it. To this end, the 2005 Gambling Act and the Gambling Commission were born.
The commission’s primary purpose was to safeguard punters and bookmakers from fraud. From that point forward, the new act required all UK bookmakers to register with the UK Gambling Commission and to receive a gambling license. Even if the bookie’s office was overseas, it still needed a permit to operate in the United Kingdom.
2014: Gambling Bill
The UK Gambling Commission imposed a further bill in the Gambling Act in 2014. Bookies overseas found ways to advertise their sportsbook in the UK without actually providing betting services in the country. Furthermore, bookmakers that had moved overseas weren’t required to pay tax on any profits made from UK punters.
The new bill closed these loopholes. Furthermore, it had a greater focus on underage betting and responsible gambling. Bookmakers needed to ensure that they had systems in place that confirmed the ages of punters as well as self-exclusion tools.
Who started bookmaking?
Harry Ogden established it in 1795 when he created a business at the New Market Heath horse racecourse in Suffolk. It offered a new way to gamble on horse races, delivering different odds and probabilities on which punters could bet. It also provided a system in which bookies could include a profit margin.
What were sports betting like before bookmaking?
It consisted of gamblers betting on the results of sporting events amongst each other. The wagers were simple and consisted of small markets, such as the event winner or loser. Someone would collect the bets before the game started and then payout the winners at the end. There was little organisation or structure.
What’s the difference between bookmaking, bookmakers and sportsbooks?
Bookmaking refers to the act of determining the best odds of sports markets on which gamblers can wager. Therefore, a bookmaker is a company or organisation that provides bookmaking services, either at a betting shop or online. Finally, a sportsbook is a platform on which the bookie provides the markets and bets.
Is bookmaking legal?
Yes, it is. The first laws in 1190 regulated gambling, while the 1845 Gambling Act governed the activities of bookmakers. Bookmaking services for online sportsbooks are still legal to this day.
Who established the first law that regulated bookmaking?
The House of Lords established a committee to develop and enforce the 1845 Gambling act, which is seen as the first law to regulate bookmaking. They created the committee due to growing concerns over the culture of betting that had taken over. The law didn’t forbid bookmaking, but simply provided rules that bookies had to follow.
Who governs bookmaking activities in the UK today?
The UK Gambling Commission is currently in charge of these activities. It governs not only gambling activities provided by UK bookies, but also any overseas companies providing betting services in the UK. Furthermore, it enforces responsible for gambling and prohibits underage wagering.
Bookmaking, and the laws that govern it, have a long history together. Sports betting had little regulation in the past, with bets consisting only of the outright winners of events. There weren’t many markets to gamble on, leaving punters with very few chances to make a profit.
New bookmakers spread out quickly once the art of bookmaking launched in 1795. However, with rising concerns over this new system that promoted gambling, new laws kicked in to stem the tide. Betting shops replaced back-alley bookies as soon as the law permitted it.
There’s no doubt that bookmaking has changed the face of sports betting forever. Even with new technology in mobile betting and live streaming, bookmaking is the primary service of every online sportsbook.