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What is Betfair?
Sunday, January 19, 2020
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Betting Exchanges


Betting exchanges offer the chance to make a guarenteed profit even before the event has finished. Learn how to profit from the exchanges and how to make a living from this growing industry.

Betfair was launched in June 2000 and has since gone on to become the largest online betting company in the UK. Not only that, it is also the largest betting exchange in the world.

Betdaq followed shortly afterwards(Sept 2001) and is the main competitor to Betfair.

Unlike a bookmaker, when you place a bet with a betting exchange you are not placing a bet at odds set by the company. The odds or prices are set by other users of the exchange.

To understand an exchange you need to understand the two main types of bet you can place. The BACK bet and the LAY bet. A BACK bet is easily understood by most – it is virtually the same as placing a bet at the bookies (except on the exchanges like Betfair and Betdaq you are likely to get a better price). If you are placing a BACK bet you are saying that in your opinion a particular outcome WILL happen – for example, you might say that whichever horse A.P.McCoy is on in the next race will win and so you fancy a bet. You are backing it.

A LAY bet is the opposite of the back bet. I might disagree with you and say that the horse that A.P.McCoy is on will never win in a month of Sundays. So I will take your bet and agree to pay out at the price agreed.

In practice, when using the exchange, we will never actually discuss the transaction or meet. We simply hit the back or lay buttons and take the price available. We can ask for a price not currently available if we want and our bet will sit unmatched in the exchange until either the market is closed or it has been matched. If the market closes without our bet being matched we will get our money back.

Most popular sporting events are available on the exchanges from horse racing, football, darts, snooker, golf, rugby, tennis, cycling, swimming and so on. Even some ‘special’ markets are made available such as ‘Who will win Big Brother’, ‘Who will be the next Prime Minister’ and other markets as they become popular. If there is not a market available and you think it should be you can even contact Betfair or Betdaq and ask for the market to be created!

Betfair Market Screen.

In this image you can see the main points to be aware of in a Betfair market. Click to see a larger image.

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In the image you can see information such as the horse and jockey name. So far so good. But what about the numbers? What do they mean?

Back Price

The back price is basically the odds of the selection winning in that market. In the example here it is a horse at 2.72. This equates to odds of 7/4 (or 2.72 – 1). So if I back this horse my liability or risk will be £10. So far so good.

Lay Price

The lay price is the reverse. Basically, if I lay this horse I am going to have to accept the liability that comes with it. In the example the current lay price is 2.76 so if I use a stake of £10, my actual liability or risk will be £10 x 1.76 = £17.60. I will lose this amount of money if the horse wins.

If the horse loses however, I will win £10.

Let’s face it, it is surely easier to pick a loser than a winner isn’t it? Be careful when thinking this. Simply laying outsiders can be costly, because now and again they DO win.

Value of bets waiting to be matched.

Imagine we want to place a BACK bet but we don’t want the price of 2.72. We want better value so we ask for 2.76. If we place

£10 at this price the bet will enter the exchange but will remain unmatched. Our £10 will then be part of the number sitting under the 2.76 on the lay side - in this case £44. This means that £44 worth of back bets have been placed at this price but are unmatched. Whilst our bet is unmatched we can cancel at any time.

Remember - we can ask for any price we like but Betfair will try to match at the best price available if a better price than we asked for is possible. For example, if you want to place a back bet at 3 and the price is 3.2 then Betfair will recognise that the price is better than we asked for and will match the bet.

Total value of bets matched.

This is the value of bets matched on both the lay side and the back side of the book.

Other things to be aware of on the exchanges

There are some oddities on exchanges that work in your favour. The most notable is that they only charge commission on your winning bets, Losses attract no commission. The net effect of this settlement method is to reduce your overall commission rate. The only way this could not happen is if you won every bet you ever placed which, of course, is not realistic. So the actual commission rate you pay will always be lower than your quoted commission rate. Some exchanges have a higher volume of matched bets and therefore better prices on certain events, so don’t just use an exchange based on the commission rate. Bets can be placed on exchanges over the phone, minimum bet £50, or over the internet, minimum bet size £2.

Don’t panic if you don’t immediately understand the odds or the way to bet on an exchange. By ticking the “More Options" link and selecting 'View "What-If figure"', you can instantly see the result of your potential bet without having to submit any money to the market. Once you understand the main screen you will be up and betting in no time at all.

Minimum bets on most exchanges are £2, so even if you have never bet on an exchange before, the cost of trying or playing around is minimal and I strongly suggest you do this so that you can get used to things.