A sportsbook is a gambling establishment that accepts bets on a variety of sporting events. These facilities are regulated by state laws, so bettors must pay taxes and obey other government regulations. Understanding how these businesses operate can make you a savvier bettor and help you recognize mispriced lines.

Most states only allow bets on professional sports teams, but some have also begun to offer wagers on amateur and high school sports. In addition, the Supreme Court has allowed sportsbooks to expand online, and many of the world’s most successful operators have made the move to the US. These companies compete for customers by offering lower transaction costs, which decrease the overall profit margins they have to charge their bettors (known as vig).

Sportsbooks work by accepting bets on both sides of a contest. They pay bettors who win and collect the losses of those who lose. The difference in profits is the sportsbook’s edge.

To reduce their risk, sportsbooks create odds for each game by adjusting the amount of action they expect on each side. They also monitor betting patterns and the performance of individual players. When a team is heavily favored, sportsbooks will often lay odds or points to balance the action and ensure that they have a reasonable profit.

Sportsbook owners have profited from the recent surge in legal sports wagering, and state governments have benefited as well. These companies are required to pay taxes on their gross revenues, and the rates vary widely across states. For example, Michigan takes a low 3.78 percent, while New Hampshire rakes in 51 percent of the total revenue.