Limits: What They Should Be and Why
In this lesson, you’re going to learn everything you need to know about betting/credit limits.
This is one of the most essential lessons we teach here at the Bookie Academy.
What Should Betting and Credit Limits Be?
Initially, you want to make sure you have a strict maximum betting limit.
One story we hear too often is a bookie starts his business, has 10-20 players betting, but he/she has one player with huge betting limits. If you have ten players with a $100/game limit and then a player with a $1000/limit, that one player can go on a run and break a new bookie.
There’s no need to offer anyone more than a $500 weekly credit limit until you know them well. One of the biggest mistakes bookies make is issuing too much credit to their players.
So, let’s say you have 10 players with a $500 credit limit.
How much should your betting limits be?
The last thing you want is to have players taking shots on you. You don’t want someone with a $500 credit limit to bet $500 on a game. That’s not the most profitable way to run a bookie. You want to have your players betting more volume, which happens when you have betting limits.
It’s better to have a player bet $100 on five games than $500 on one game.
If a player has a $500 credit limit, the most they should be able to bet on straight full game markets (moneylines, spreads and totals) is $100. From there, you should offer 50% of those limits on 1H/2H straight markets and then about 25% of those limits for quarters, props and other exotic bets.
Here’s how your limits would look for a bettor with a $500 credit limit:
You don’t want to put your players in a bad position either. If you know they make $500/week, they can’t realistically afford a $500 credit limit. If a guy makes $500/week, set his credit limit at no more than $100/week and then his betting limits should be no more than $20/bet.
Why Bookies Need Betting and Credit Limits
The simple reason why a bookie needs to implement betting and credit limits is because they risk going broke otherwise. The initial limits you set for your players are based on multiple factors.
1. Bankroll: Your bankroll plays a role in the limits you offer. We recommend maintaining an escrow account with a minimum of 20% of the total credit you provide.
Here’s an example. If you have 20 players each with $500 in credit ($10,000 in credit provided), your escrow account should have a minimum of $2000 for emergencies.
What are potential emergencies where you would use your escrow account?
You only use the escrow account if a player stiffs you or pays you late, nothing else.
2. Qualifying Players: Even if you know someone, it’s vital to qualify your players. Keep all limits low until you learn more about each player, their preferences and ability to pay.
It’s a lot easier to raise limits as you become more familiar with each player than to cut limits.
Your goal is to retain your recreational clients. These are clients that enjoy betting for fun instead of betting because they need money. You don’t want players that are in financial peril wagering in your sportsbook. You want players that can afford to gamble and pay up if they lose.
The only way to build these relationships is through time. Start small and once you start receiving some on-time payments from a player, you can look at increasing their betting/credit limits.
You’re going to learn more about the business with experience. Don’t risk your business early on by issuing too much credit or accepting too big of bets. It may feel like you’re making slower progress, but you want to build a strong foundation, which is done by finding the best clients.