Pay per head indicates that a sportsbook owner pays a weekly charge to a pay per head platform for each betting client on his books. The client gets a rebate, which can be taken out of the payout, at the end of every week. These rebates are normally around 8%-10% for both sportsbooks and sporting events. It is a huge part of any sports betting business model.
But it has some significant downsides as well. On one hand you will have to carry more liability than other companies because the customer can only withdraw money once a week and all withdrawals must be processed manually. On top of that you will also have to pay a commission on any winning trades no matter how small they might be.
How does it work?
The gaming company makes a contract with a pay per head provider who then supplies the sportsbook with all the data he needs to feed his customers. The fee for this service is usually around 10 cents per head or $100 per 1k active customers. This works out to around $10,000 a month. But it is worth it as it will bring in up to $1 million in revenue in the long run because of rebates and reduced risk exposure.
The next step is on the bookmaker’s side where he creates individual accounts for each client and provides them with their login details. Once the customer signs up and makes their first deposit, the system will place a fee of $5 or $10 depending on the bookmaker, which is for ‘bankrolling’ the customer’s account. After that there are never any fees to deal with as most pay per head providers heavily discount their fees for bookmakers.
The Complete Guide of Pay Per Head:
Different sportsbooks offer different Pay Per Head packages to their clients. Some might cover a few sports while others can cover up to 100 sports due to their aggressive marketing techniques. At the end of the day these packages all have one thing in common: They are a great way for you as a betting client to save money. The platform will pay you every week from your bet but you will still have to pay upfront for the service.
This means that for every dollar you put at stake on Pay Per Head, your Sportsbook will only ask for, let’s say 50% of the total amount i.e. if you bet $100, the Pay Per Head company will only ask for $50 upfront and the remaining $50 will be paid to you when the winnings are credited to your account.
Pay Per Head also means that you can have more flexible betting terms because as a customer you won’t have to wait until your betting stake has been returned to withdraw it directly from your Sportsbook account. This is a huge advantage for betting clients who normally have large staking plans and therefore need large amounts of time to get their winnings returned by their bookies.