Every day, more and more people choose to place their bets on Betfair instead of at a traditional bookmaker's house. If you are considering taking on the stock market challenge, read this article till the end!
We tried to make this guide simple and to completely introduce you to the betting exchanges. We will not go into long complicated examples, but we will give you the knowledge you need.
What are Betting Exchanges?
The betting exchange is a market that brings together people who want to bet "For" a particular result, and people who want to bet "Against" it.
This means that when you place a bet on the betting exchange, you are actually betting against other players instead of the site.
The exchange organizer, Betfair, for example, makes its profit by taking a fixed commission from the profits. This is different from traditional bookmakers who earn their income from the difference between the bets collected and the profits paid in one market.
Due to the fact that the betting exchange does not risk the profits paid out to be more than the collected bets, it can afford to take a small enough commission to make its profits significantly higher than those of the bookmakers.
A drawback of betting exchanges is that they really only work when there are enough users and liquidity (money) in one market. If there are not enough players, there will not be many offers in the markets and it will be difficult to find who will cover your bet. That is why we strongly recommend that you choose the biggest exchange - Betfair - which has many times more players than any of the other exchanges. But even in Betfair, there are markets that suffer from low liquidity. For example, amateur football divisions and low-level hierarchy tournaments often lack players. Bookmakers do not have this problem.
However, this problem can be solved with a very simple remedy - in addition to Betfair, you can also register with a bookmaker like Bet365 to place your bets on the less popular betting markets and the rest in Betfair.
Explanation of "For" and "Against" bets
The "For" bet is exactly the same bet you put in regular bookmakers. You are betting on the outcome of the selected event.
An "Against" is a bet against the outcome. This is essentially what the bookmaker does every time he accepts a bet from its players.
For example, let's say you bet £ 100 on Team A at a 4.00 odd on Bet365. By accepting this bet, Bet365 effectively places an "Against" bet with the ability to win £100 and a potential liability (the money it will have to pay when the result is realized) of £300.
A common market in betting exchanges
In order to place a bet on the betting exchange, the bet must be covered by someone else. If you bet "For" a result, someone has to agree to the odds in question, placing an "Against" bet (and vice versa).
Let's take a look at a 1x2 market in Betfair:
This looks like a standard market in Betfair and most other exchanges. However, the market may seem a little tricky if you have no experience with this type of bet.
The best way to explain it is to look at its two sides separately:
The blue "For" half of the market
This side of the market contains all the possible bets that you can place instantly, that is, already covered by other players.
In this case, if you want to bet on Manchester City, the maximum odd already covered is 1.51. Below it you see the amount in Euro - this is the maximum amount you can bet on City at this rate. If you want to bet more than what is available on the maximum odd (in less popular markets, the amount is usually much lower), you will need to place the rest of your bet on the lower odds.
In this example, if you want to bet € 1000 on Manchester City, you can place a € 587 bet at 1.51 bet and the remaining amount up to € 1000 at 1.50.
You may also want to bet on a higher odd, but then you will have to wait for someone to cover your bet.
The red "Against" half of the market
The "counter" part of the market is the exact opposite of the "For" half. You see that there are players who have asked to place a "For" bet at 1.52, 1.53 and 1.54 odds.
If you want to bet against Manchester City's success, you can accept the odds they offer or you can offer a lower odd and wait for it to be covered by any of the other players.
Placing bets
Placing “For” bets is very similar to placing bets at the traditional bookmakers. You click on the blue odd and enter the stake amount. The only difference is that the odd’s field can be edited, that is, you can write a larger odd ratio than the maximum coverage so far and wait for someone to cover it.
More confusing may be to place “Against” bets.
In addition to re-editing the odds, there are a few other things that are often misunderstood by novices.
As you can see, there is a "For” Bet Amount" field next to the odd. This is the amount of bet that you are ready to accept from another player. In this case we have chosen 10 euros. Placing such a bet means that if Manchester City does NOT win, we will win € 10. On the right is the debt - that is, the amount we will have to pay if City wins.
There are two possible ways out of this bet:
- Manchester City wins - net loss € 5.20
- Manchester City does not win (draw or lose) - we win net € 10.00
Betfair's commission explanation
Unlike traditional bookies, exchanges make money by taking commission only on winning bets.
Players' fees vary depending on the country they come from. For players from UK, the standard commission is 6.5%, which is somewhere in the middle - countries like the UK and Italy have a lower initial commission and Albania, Armenia, Croatia, Serbia and other countries have a higher commission.
The nice thing for the players is that over time this fee will decrease depending on your activity. It can be lowered at a maximum of 60%. Better still, the more you earn, the more the commission will be reduced, because the level of discount depends on the Betfair points collected, which in turn are collected by paying commissions.
It is also important to know that commission is only taken from net profit. For example, if you bet € 10 on a 1.50 odd and you win, your net profit is € 5. The commission, if it is still 6%, is calculated as follows: 6% from € 5 = € 0,30.
Conclusion
We hope that we have explained how the exchanges work and that you feel comfortable using them. In another article, we explained how to make Betfair deposits and withdrawals - Betfair deposits and withdrawals.
You can also read popular Betfair trading strategies from Betfair Trading Strategies.
Betting exchanges have a lot of potential because of their advantages over their traditional bookmakers and you should definitely at least try them. You can make Betfair registration.
