One of the biggest mysteries in the UK gambling scene is why Bookmakers aren’t extinct yet. There’s only a few benefits to using them, which I’ve listed in my post “Why Use Bookies Instead of the Betting Exchange?“. But that’s basically the extent of it. Punters should definitely be using betting exchanges.
Unconvinced? Read on…
The most important thing about betting is the odds. And betting exchanges give the best odds. If this wasn’t the case, then Bookmakers would constantly provide risk free arbitrage bets to their customers. But arbs aren’t that frequent — you need specialist arbing software to regularly identify them. Relatively speaking, arbs are infrequent occurrences.
If you still need convincing then try picking a random selection right now — the first one that comes into your head. I chose Burnley to beat Spurs this coming weekend (which I hope doesn’t happen).
Ladbrokes, who have relatively good odds, currently offers 5.5 whilst the Betfair Exchange has 6.4 on the Back. So Ladbrokes offers only 85.9% of Betfair’s price. This was expected.
You do have to pay commission if you win on Betfair, though. But even so the exchange still offers significantly better value. For example, if you stake £10 at 6.4 and your commission rate is 5%* then you have the following.
- Profit: (£10 x 5.5) – £10 = +£45
- Gross Profit: (£10 x 6.4) – £10 = +£54
- Commission: £54 x 5% = -£2.70
- Net Profit: £54 – £2.70 = +£51.30
Therefore, at these odds you’ll pay away £2.70 of your winnings on commission. But you’re still getting £6.30 more profit on winning bets than at the Bookmaker. That’s 14% more value!
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The Fairest Deal
The exchange odds aren’t just better than the Bookmakers’ — they’re also fair.
What I mean by “fair” is that the prices are in line with the real chance of an event happening. So if, for example, there’s a 50% real chance of something occurring then betting exchanges will reflect this with odds of 2.0, or there abouts.
This may sound far-fetched, but it’s true. The betting exchange collates the opinions of the public and naturally forms the odds. On average the prices produced by the exchange are very accurate. It’s the best estimator that we have. Learn more on the efficiency of the betting exchange.
Bookmakers, on the other hand, ensure that their odds don’t truly reflect the chance of an event happening. That’s how they earn.
Trading Tools & Bots
Betting via the main website of your favourite Bookmaker is fine for a cheeky punt. But if you want to bet professionally then you’ll need some extra tools to help you.
Many of the key features of Betfair Trading Tools were inspired by the very same applications that traders used on Forex markets, allowing for complex, automated and more refined betting strategies to be developed and implemented with ease. The “manual traders” — using only the standard exchange website –are at a disadvantage by not upgrading to a faster, more efficient bet placement system capable of competing with the professionals.
Betfair Trading Products
Leading on from the last point — betting exchanges encourage professionals. Betting exchanges like the idea of punters earning money, because they take a cut of the profits.
Trading Tools and other programs are approved and built on the betting exchange’s own API (which stands for “Application Programming Interface”). The API enables the program to interface directly with the exchange through your betting account. Applications such as BF Bot Manager can therefore quickly access markets, place bets and enable users to check their current and historical bets from within the software.
Importantly, the API enables the players to back test their strategies. Bookmakers wouldn’t dare encourage punters to do this because
(a) it encourages punters to take advantage of their price inaccuracies, and
(b) it exposes the inferior value in their odds!
If you’re as much as caught scraping Bookmakers’ odds from their site — let alone betting professionally on it — you’ll be shown the exit door very promptly. Learn more about why bookmakers close your account.
Request Your Own Odds
The amazing thing about the betting exchange is that you don’t need to take the face value odds. You have the option to request better odds and see if you get matched on your stake from an opposing punter.
Just a tip from my own experience here: there’s usually value between the Back and Lay odds on ‘wide spreads’, where there’s a large gap between the Back and Lay odds. Due to the reduced liquidity, wide spreads are more common on high odds long-shots than low odds favourites.
For example, you might find the following scenario:
BACK 10.0 — 15.0 LAY
In this scenario, a good value Back price is typically at 15.0 and a good value Lay price is at 10.0.
Therefore if you’re able to get matched at either (or both) sides of the spread then you’ve secured an excellent bet. However, the catch is that you simply might not get matched at those odds. So what can you do?
Well, unlike at the bookmakers you can monitor your bet, and see if it gets matched. If it doesn’t, then you always have the option to cancel the order and move on.
Another option is re-placing your Back bet at 14.5 (provided you still think this is good value). You won’t get matched right away, but you’ll be the first in the queue because the current 15.0 Lay price becomes your now-improved 14.5. Anyone looking to Lay immediately at the face value odds on the exchange will take your money, thereby ‘matching’ your bet.
These are very basic principles, but ones that the Bookmaker doesn’t enable punters to do.