Betfair was launched in 2000 and pioneered the first successful Betting Exchange. It operates worldwide, and has become a huge and hugely successful operation.
We dabbled with it a few years ago, but more recently have thrown ourselves into it a lot more and are now convinced that no punter should be without a Betfair account if they like betting online…
What Is A Betting Exchange?
A betting exchange is a service that allows people or organisations to ‘buy’ or ‘sell’ bets. It is very different to a bookmaker as far as us ‘normal’ punters are concerned. We go to a bookies to place a bet, and it is the bookie who ‘lays’ the bet for us.
With a betting exchange, anyone can play at being a bookmaker as they give you the opportunity to lay bets. In simple terms, a betting exchange account allows you to bet on a horse to lose, or on a football team to not win.
Here’s a simple example; Arsenal are playing Tottenham and based on recent form you don’t think Tottenham will win and an Arsenal win is more likely. So you back Arsenal, and as is often the case with these two teams it is a goalfest and ends in a 3-3 draw. If you backed Arsenal to win then you lose the bet. If you had gone to a betting exchange and laid Tottenham then you would have won…because Tottenham didn’t win. When you lay a football team then you only lose if that team surprises you and wins.
Betting exchanges match up bets between people who back a team to win and people who lay a team to lose. I want to bet £3 on Arsenal winning, and you want to lay Arsenal for £3. When we place our bets the exchange matches us up. You laid Arsenal at decimal odds of 2.0 and I backed them at 2.0. Our bets get matched, the game ends in a draw and you win £3 from me (and get your £3 stake back). I got to play bookmaker for 90 minutes and I lost….my liability was £3 so my account reduces by that amount. If Tottenham had won then you would also have won that £3 from me. You had two chances of winning, whereas I needed the win for Arsenal for me to be in profit. The betting exchange takes a small % commission from your winnings for providing the service…everyone wins (except me in that example!).
Well, Betfair have simply become the ‘Google’ of betting exchanges – there are other search engines, but nearly everyone uses Google….there are other betting exchanges, but most people use Betfair. In fact, how many of you can name another betting exchange?
Using Betfair because it is the biggest is not our stance; we recommend Betfair because it is the best.
Every single market you could want or think of is on there; every football match around the world, every horse race, and so on. It is also pretty much the norm for you to be able to get better odds on Betfair than you would in a bookmaker’s shop.
As well as operating as a betting exchange it does also offer a fixed odds betting service which works the same as placing a bet online with a bookmaker (you don’t lay bets in the fixed odds area).
The main advantage is the exchange service allows you to place and lay bets while the sporting event is taking place. This is called ‘In-Play’ betting (or ‘in-running’). You can use in-play odds to hedge your bets or use a lay bet to guarantee a profitable position. Here’s an example, and we’ll use football again…
…it’s that Arsenal v Tottenham match again and I backed Arsenal to win at decimal odds of 2.0 for £5. Arsenal are winning 3-1 until the 70th minute when a penalty is awarded to Tottenham and the Arsenal defender who gave the penalty away has been sent off. Tottenham score the penalty, and it is now 3-2 and Arsenal are down to 10 men. I can see the way this is going…my definite win for Arsenal now looks very shaky. Before the penalty was awarded the in-play odds on Arsenal winning had dropped to 1.1 because it looked so likely that they would win when they were 2 goals up with only 20 minutes left to play. Now the market has them at 1.6 because Tottenham scoring and the player being sent off meant that the odds in the market have shifted – an Arsenal win is not so nailed on now. I just have that feeling that my bet on Arsenal is going to fail, but by using Betfair to play a lay bet on Arsenal I can now cover my losses or even get my stake back. I lay Arsenal for £3 at 1.6. I have hedged my bet and can stop worrying about the game….here’s why:
– If Arsenal win then I win £3 from my original bet. I will also have to pay out winnings on the lay bet I did, but as I backed at odds of 2.0 and laid at 1.6 then my losses for the lay are only £1.80. So I make £1.20 profit.
– If the game is a draw I lose my £3 bet on Arsenal, but I win a £3 stake from someone who backed Arsenal at 1.6, so I have evened out.
– If Tottenham win then I again lose my £3 bet on Arsenal but I will win the £3 stake from the bet I laid on Arsenal.
Best case scenario, I am £1.20 up – worst case scenario I don’t lose any money. So, Betfair gives you the opportunity to change your position in reaction to the events that happen during the course of a sporting event. You can even bet in-play while a horse race is running; you just have to be quick!
Here’s a horse racing example of a risk-free bet….you read about a horse called Esphraim the night before it’s first race and how good things are expected – the odds that evening are 12.0. You back it to win at £2. A couple of hours before the race something has shifted in the market and the odds on Esphraim winning have dropped way down to 5.0. Maybe the owners have placed a massive bet on the horse, or maybe the Racing Post have tipped it that morning, but something has made the odds drop. Your bet at 12.0 is safe, but you now have the option of laying that horse at 6.0.
If you make the lay for £2 then you can wait for the race safe in the knowledge that you are about to enjoy a no-risk bet. If Esphraim wins then you get £24 into your account (£22 winnings and £2 take back). You then pay out £10 for the lay bet you did, but your profit is £12. Pretty good. If Esphraim didn’t manage to win then you win £2 from your lay bet so your original stake has been covered – you just had the equivalent of a 5/1 bet for ‘free’ through Betfair. Your winnings are less than they would have been without the lay, but that is only fair as you are taking most of the risk out of betting. Here’s a real life very low stakes example of a very, very quick back and lay position that has effectively given us a free bet:
You can see the horse names, numbers and jockey silks images on the left hand side – in there as well is the value £1.60 under the horse called Mingun Bell and £0.00 under all of the other horses. These figures are the ones that show you your position in the market. In this example I will win £1.60 if Mingun Bell wins and lose exactly nothing if it doesn’t. This is a low budget quick example, and here is how this position was obtained:
We backed Mingun Bell at decimal odds of 4.8 for £2. This would give us a profit of £7.60 if the horse won. Having also read that both Soaring Spirits & Sharp And Smart were considered to be threats in this race too we decided to take the risk out by putting a lay bet at odds of 4.0. This was matched a little while later and we will pay out £6 to whoever bet with us if Mingun Bell wins. We will also get our £7.60 winnings, so we will have a profit of £1.60 and if the horse doesn’t win then we get our original stake back from the £2 that someone has bet with us when we did the lay bet. So, in effect we have a free bet on Mingun Bell in this race at odds of 1.8. Simple.
Betfair launched their ‘cash out’ facility in 2012, and they have revolutionised the betting industry once again. ‘Cash Out’ is only available on certain sporting events (usually the more popular ones), but it will give you the option to take your profit early or stop a loss at the press of a button, without having to work out the lay bets yourself. The maths involved with managing a balance of backing and laying can be quite complex, so this just makes life very easy for the average punter or sports fan.
Below is an example from a Capital Cup football match. I backed Bradford for £3.50 to beat York at odds of 2.5. If Bradford win I receive £5.25 profit but seeing as it is the first round of the League Cup and anything can happen I will be looking to cash out if Bradford take the lead:
Bradford take the lead and the odds on them winning the match drop significantly and the cash-out amount is now showing a profit of £2.61 if I take the offer there and then, which I fortunately do as the game ended in a 2-2 draw (with York knocking Bradford out on penalties!):
In summary, Betfair gives you more chances to guarantee yourself a profit on your betting, or to stop the losses from being significant if you chose the wrong golfer or tennis player. It’s changed how I approach my betting, and is proving to be a lot more fun than how I used to operate.