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Learn how the betting exchange works

betfairHave you ever wandered around Betfair? In this article you will find tips on how to bet at Betfair, as well as its pros and cons compared to other companies. To begin with, Betfair is not affiliated with any bookmakers. When you place a bet, another bettor is acting as the bookie. Betfair profits by taking a small percentage of net winnings. This percentage starts from 5% and the more you bet it is possible to decrease down to 2.5%.

The following example demonstrates the betting procedure.

From what we can see, you can place a bet in favour of England with odds of 1.37. But the amount offered for betting (by other bettors who act as bookies) is €521. You receive these offers as orders placed by other bettor/bookies. The bookie who will be the first one to place such an order, will be the first one to see his wagers matched up. In case you would like to bet more money in favour of Greece, e.g. €600, you could do so according to the following two ways: Click on the 1.37 cell and type 600€ within the cell, for a bet in favour of England. The amount of €521 that was already offered, will be matched up, whereas the remaining €79 will not. They will appear in the “Bet against” area, displacing the pink cell, whose odds are now 1.4, to the right and the €279 right under it. The remaining “Bet against” cells will move to the right. So, you are the first on the line to seek for the odds of 1.37 in favour of England, until another “bookie” accepts your bet and thus match up the remaining €79. That would be the best-case scenario, although it might never come true, especially in Live Betting or if England has a big lead and the game is about to end.

Another way to do this is to place an order for a €600 bet in favour of England with odds of 1.35. From the total of €600, the €521 will be matched up at the best price offered at this point for Greece to win, which is 1.37, while the remaining €79 will be matched up at 1.35. The “My Bets” tab gives you the option of adjusting the display of different betting odds separately or grouped together at an average return. Various settings such as displaying the possible winnings before placing a bet, with or without commission, etc., are available thanks to Betfair’s user-friendly software. These settings are available at the website’s Help menu.

Calculating the actual odds

You can calculate the actual odds of a matched up bet, even before you place it, by using simple math. If for example we type €10 in the blue betting cell in favour of a team whose indicated odds will be 2 you can see the amount of €9.50 in green font, underneath this team’s name, while the amount -€10 in red font will be listed under the rest of the events. This means that if your selected team wins, then your net profit will be €9.50, whereas in the opposite case, you will lose your €10. So, your actual odds will be the amount of €9.50 in green font plus your betting amount of €10, the total of which you divide once again by your betting amount (€10). In short:

Odds=(expected net profit+betting amount)/(betting amount)

In this case: (10+9.50)/10=1.95. The commission is 5% of net profit, i.e. your net profit is 95% of the net profit without commission (i.e. based on the listed odds). Otherwise, you can calculate the odds without typing inside the cell. When you bet in favour of an event, if B is the listed return, then the actual (A) return is:

Α=(Β-1)*0.95+1

All these results can vary if you have accumulated enough Betfair Points to reduce the percentage of commission. Let’s say you place a double chance Χ2 bet on Anderlecht to win away against Arsenal. In fact, you want to play against Arsenal, or else act as the bookmaker for those who seek for the lowest available odds for Arsenal (in the pink square).

You can see for example that the odds of 1.28 are offered to bet against Arsenal. The easiest way to calculate the payouts is to type an amount in the cell when betting against Arsenal, which in case Arsenal wins, will result in you losing only €10. This means that the betting amount for the double chance Χ2 bet on Anderlecht will be €10. We can see that the odds in case Arsenal wins are 1.27 and the payout for their win will be €35.73, whereas the amount you expect to win in case of a draw or a victory of Anderlecht will be €33.94. So, the net payout of the double chance you wish to bet on is (10+33.94)/10=4.394. (As seen in the Figure, the payout is a bit higher due to the reduced percentage of commission, i.e 4.9% instead of 5%, so the net payout is 4.398).

Betfair also offers the Draw no Bet option with high payouts. Let’s say you want to bet €10 in favour of a team, but you also want to make sure that your money will be returned to you in case the match ends in a draw; what you have to do is type two amounts in both the “Bet In Favour” cell and the “Draw” cell, whose sum equals €10, but your expected profit in case of a draw will be exactly €0. So if the match ends in a draw you neither make a profit nor a loss, whereas if the team wins you will get the corresponding payout. If for example, the odds in favour are 6 and the odds for the draw are 4, you will have to bet €2.50 on the draw and the remaining €7.50 in favour of your team. The expected net payout will be €33.25, meaning that the Draw no Bet payout will be (10+33.25)/10=4.325.

The odds offered by Betfair are usually higher than the ones you can find in the various bookmakers even if you count the commission in; one of the drawbacks is that you can mainly bet on singles accepted or certain very specific parlays. Another drawback is that in order to find good odds in games with a relatively small turnover you should wait until right before kick-off, when the bettors have assessed the values, and the gap between the “In Favour” and “Against” options is closing. The variation in prices offered or requested with Betfair Exchange consist a guideline for many bookmakers and also indicate the bookmakers who make mistakes when setting odds; those are the mistakes to take advantage of when value betting.