Betfair is the World’s Largest Peer to Peer Betting Exchange
www.betfair.com is the world’s largest online betting exchange and the betting site punters most count on for GREAT ODDS involving sports matches, races and future events. Here you’re wagering not against the house, but rather with other members of the exchange. With the middle man cut out, there is no bookmaker advantage to overcome; instead you pay just a small commission on “net market win”. In this article I’ll cover in detail how Betfair works, but first let me note: joining Betfair via the banner to the right gets you a £20 risk free bet. This is a semi-exclusive offer not available direct from their website. With this offer covered I’ll explain Betfair in great detail and then conclude with answers to several frequently asked questions (FAQ).
How to Use Betfair
Once you get the hang of it, using Betfair is a rather simple. The first thing worth noting is there are two ways you can wager. The first is called “back” which is a wager that selection will win, and the second is called a “lay” which is a wager that selection will lose. In order to “back” another user must “lay, and in order to “lay” another user must “back”. When this happens the wager is considered “matched”. If the wager is not immediately matched you have the option of cancelling it, or leaving it “unmatched” in which case it stays a live offer until it is either cancelled or matched. If this is confusing don’t worry, I’ll explain Betfair in more details using illustrations.
The screen shot below is from the live in-play betting interface for a One Day International (ODI) cricket match between England and India. At the time it was taken, India was the first to bat and the score was 83-3 after 20.3 overs.
Now let’s say for example purposes in this match we’re looking to make a wager on India. To do this we have two options. We can “back” India which is a bet they’ll win, or we can “lay” their opponent England which is a bet England will lose. Examining the options: right now there is $17,118 at odds 2.10 already available to be matched instantly should we decide to back India. If we wanted to lay England instead we see there is $18,920 available at 1.90 to do this. Now to note, 1.90 is the odds we are giving to someone else. To figure out our own odds we would need to use a formula of 1 + ( 1/(ODDS-1) ) (<- remember this formula as you’ll need it often). This plugs in as 1+(1/1.90-1) and solves to 2.111. So, we’re getting a smidgen better making a “lay” wager at 1.90 (giving us 2.111) than making a “back” at 2.110. So here we decide to “lay” England, using a stake of $500.00.
Hedging in NOT –EV at Betfair
A few hours after making this wager, we see the status of this match is as follows:
We’re in great shape, but there are still plenty of overs left and it’s certainly possible England could make a comeback here. One of the many benefits to exchange betting is the option to cash out for a guaranteed profit at any time. To explore if that’s worth doing, let’s take a look at what the In-play odds were at this point.
Earlier we staked $500 that England would lose the match at effective odds of 2.111. Now it’s possible for us to wager they’ll win the match at 4.1 odds. To see our guaranteed profit if we cashed out of this bet at the current odds, we can use the website www.scalpulator.com. On their home page we enter 2.111 on line 1, 4.1 on line 2, click the radial button labelled risk, enter $500 and click submit. What this tells us is if we now “back” England at 4.1 odds for $257.44 we’re guaranteed a profit of $298.06 before commission regardless of which team wins the match. One thing worth noting is making a play like this is simply an act of cashing out your equity. It is not –EV (negative expected value) as conventional wisdom suggests, for reason that at Betfair the odds are often true market no-vig prices and we’re betting them pre-commission. I’ll elaborate on this in the next section.
The starting commission rate at Betfair is 5% and reduces as you achieve a higher discount rate. I’ll explain that in a moment, but first let me note – commission is paid only on “net market win”. In the above example we wagered $500 at odds 2.111, so, risk $500 to win $555.50 AND we wagered $257.44 on the opposite side at odds 4.1 which is risk $257.44 to win $798.06. These bets offset one another so normally our commission would be either $555.50*0.05=$27.78 or $798.06*0.05=$39.90. However this isn’t how Betfair works! In order to boost live betting trades, Betfair greatly encourages their betting exchange users to engage in series of “backs” and “lays” throughout the match in an attempt to trade for a profit. In the end, they take a 5% cut of any positive result for that market. In this example we had bet in such a way that our before commission profit was $298.06 regardless of outcome. This is the amount Betfair will charge us a 5% commission on and therefore rather than paying a $27.78 or a $39.90 commission we instead pay just $14.90, and we’ll pay even less if we achieve a discount rate.
Every 10 pence (£0.10) paid in commission earns you a single Betfair point. As you accumulate points you’ll achieve a discount rate based on the figures shown in the chart to the right. This discount rate is calculated weekly (Sunday at midnight), and once calculated your points balance will be reduced by 15%. This is known as weekly decay – you can however prevent weekly decay by using holidays. Each account starts with a single holiday and then a new one is added every 3 months. You can have as many as 4-holidays stored for future use. When using their calendar to schedule a week long holiday, you can continue to bet during that holiday but will not earn points for any markets settled during this period. What’s important to note – if you continue to bet the same amount each week, the decay won’t affect you because you’ll reach a point where the points deducted are the ones you’re earning each week.
Commission and Points Example
- You have net market winnings of €350
- The standard commission rate is 5%.
- Your current discount rate is 26%.
To calculate your commission first take 5% of €350 = €17.5, then deduct 26% (€4.55) to see the commission taken is €12.95.
To calculate your point earnings you’ll need to convert Euros to UK pounds. If the current exchange rate is 1 EUR = 0.872901831 GBP – take 12.95*0.872901831=£11.30 and therefore your points earnings are 113.
Note: it is possible to open a Betfair account in Australian Dollars, Canadian Dollars, Euros, Hong Kong Dollars, Krone, Kroner, Kronor, Singapore Dollars, U.K. Pounds, or U.S. Dollars. However, as I just showed in the example above, points are always earned based on commission paid in the UK pound (GBP) equivalent.
Betfair Betting Exchange Compared
The majority of online bookmakers charge 1.91 for odds or even bets – meaning a 2-way wager where each side has a 50% chance of winning. At European decimal odds of 1.91 $100 staked is a wager of risk $100 to win $91. If the bet truly has a 50% chance of winning, then 50% of the time the bookmaker is shorting you $9.00 on the payout, so on average you’re being shorted $4.50 per $100 bet, which otherwise can be stated as 4.5%. At Betfair chances are you’d get this same wager matched at true odds of 2.00 and then just need to pay a 5% commission when you win. Again you’re winning 50% of the time so on average you’re paying 2.5% commission per $100 wagered. Therefore at Betfair single wagers (as opposed to “back” then “lay” trades – also known as hedges) have a 2.5% advantage to overcome instead of the much higher 4.5% Bookmaker advantage.
Keep in mind, as you wager at Betfair you’ll accumulate points that reduce the effective commission rate; this makes their already favourable odds even more favourable. Also, don’t underestimate the fact that Betfair calculates commission only after the market is settled using “net market win”. This allows us to hedge our bets, minimising loss or locking in a win, in a vig free environment while only paying commission in the times, and on the amounts, we come out ahead. This can’t be done at a bookmaker anywhere close to affordable due to the vig, so as you can see Betfair offers even better value than a 2.5% advantage we start off needing to overcome.
Using Betfair to Minimise a Loss
For the reason it’s similar to teaching you how to suck eggs, many Betfair reviews omit covering how to use Betfair to minimise a loss. This however can be one of the most powerful features of their site. There are times when a match just isn’t going our way and we desperately want to get out of the wager for a small loss. A recent example of this, I was watching a Russian Division 1 football match where 18 minutes into the match the score was nil-nil and the in-play betting odds were:
At this point in the match I absolutely loved Alania Vladikavkaz at the current market price so I quickly made a $1000.00 “back” at 1.77. The first $81.00 got matched at 1.79, the next $81.00 at 1.78 and the remaining $838 at 1.77, and after fiddling with the math I see my overall wager was $1000 at odds 1.772. The excitement had worn off a little by half time when the match was still nil-nil, but in the second half Alania Vladikavkaz had breakaways, multiple corners and even a penalty kick just outside the box and I thought for sure they were going to score at some point. However at the 88-minute mark the score was still a bore draw, panic set in, and I had to look to see if there was a way to limit my potential loss. At this point the betting odds were:
What you can’t see on this screen shot is that there was also $1343 available to “lay” Alania Vladikavkaz at odds 2.10. At this point, I wanted to get off it in a hurry and didn’t have time to mess around with too much math. So what I quickly figured – using: 1 + (1/[ODDS-1]) – that to give someone odds 2.02 on a lay, my odds are 1.98, and to give someone 2.10 on a lay my odds are 1.91. These average to about 1.945 and in a hurry this is close enough. My next step was to go to scalpulator.com plug in the odds I got earlier of 1.772 on line 1, and the current odds to lose 1.945 on line 2. I then selected the risk radial option, entered $1000 and clicked submit. Here I see by making a $911.05 lay @ 1.945 I’m able to lock in a guaranteed loss of $139.05 regardless of outcome. With 12 minutes left in the match I quickly executed that by going to Betfair and taking the max amount available for all odds better than 2.10 “lay” and then bet the remainder of the $911.05 total on a 2.10 “lay”. Note: when doing this I selected the option “payout” as this is the maximum I was willing to “payout” not the “liability” I wished the matching backer to have.
Barely worth noting is this match did in fact end in a nil-nil bore draw and I saved a lot money by trading off it before it was too late. The actual loss was $129.22, which was better than the $139.05 I had estimated. So in short I backed off my bet, lost $129.22 instead of $1,000. I don’t owe any commission and I’m happy to have saved $870.78.
What if My Bets Don’t Get Matched?
One of the very few disadvantages to Betfair is that your wager needs to get matched in order to have an active bet. However, as you can see from several screen shots I’ve posted in this review, each selection in a match has three sets of odds with a monetary amount below them. These are the amounts other exchange users have already committed to wagering at the reverse odds (meaning they have an unmatched offer someone else can match). When we bet at these prices our bet matches theirs and both of us have an active “matched” wager against one another. Now if for some reason this doesn’t happen (such as someone else wagered a split second before us) Betfair will give a warning that our wager wasn’t fully matched.
Very easy to find, right on the betting menu we can see current “unmatched” bets – and we’re presented with an option to cancel. If you’re new and not comfortable leaving “unmatched” bets open you can just click cancel. In other cases you can click the small refresh icon and wait around a bit to see if all or some of that wager ends up “matched”. At any point you can cancel unmatched bets and might choose to then bet at odds showing on the screen that are immediately available for an instant match. If this is at all confusing, don’t worry. Using the banner at the top of this page you can access a £20 risk free bet. This will allow you to practice using Betfair without risking a loss.
What Sports Does Betfair Offer?
At Betfair all the popular sports around the world are covered. Football and tennis betting are perhaps most popular with traders. They however also offer American Football, Australian Rules, Baseball, Basketball, Bowls, Boxing, Cricket, Cycling, Darts, Floorball, Golf, Handball, Ice Hockey, Motor Sport (including Formula 1), Netball, Olympics 2012, Poker, Politics, Rugby League, Rugby Union, Snooker, Volleyball and Winter Sports. This is along with financial betting, greyhounds and are one the most popular betting sites in the world for horse race betting.
What Countries Does Betfair Service?
For the most part Betfair is a truly international brand. Their website is available in English, български (Bulgarian), Česky (Czech), Dansk (Danish), Deutsch (German), Ελληνικά (Greek), Español (Spanish), Suomi (Finnish), Italiano (Italian), Norsk (Norwegian), Polski (Polish), Português (Portuguese) Русский (Russian), Svenska (Swedish), Türkçe (Turkish), 简体中文 (Chinese) and 繁體中文 (Taiwanese Mandarin). They are also very friendly to other countries not listed, for example Betfair is very popular in India, Malaysia, and Singapore.
The only countries Betfair restricts from using their site are United States, France, China, Hong Kong, Japan, Philippines, and Turkey. We suggest 5dimes.eu as an alternative for US and French sports bettors, and Pinnacle Sports for those living in China, Hong Kong, Japan, Philippines, and Turkey. For everyone else, Betfair is the site for getting the most favourable odds. And remember, using the banner on the top of this page grants you access to a £20 risk free bet.
Note: Betfair also holds and Australian bookmakers license, meaning Aussies can play here as well. The only difference is Australia residents can not participate in live-in play betting.
How Can I Fund My Betfair Account?
Punters from Europe as well as punters from Indian, Canada, Singapore and Taiwan can fund their account using popular e-wallets (ex: Moneybookers and Neteller). Punters from other accepted Asian countries such as Malaysia will want to use EntroPay.
How do I get Paid?
For those living in a country where gambling is socially acceptable, Moneybookers and Neteller are great options for withdrawal. Betfair does however offer International Bank Wire which comes in handy especially for Asian punters. Payments to Asian bank accounts are sent via a 3rd party processor so the name Betfair won’t appear on you bank statement. Of course those living in Europe can also get paid via a paper check, or standard bank transfer.
Is Betfair Legit?
Betfair was founded in 2000 and has since has grown into the world’s largest betting exchange. They are licensed by the governments of UK, Italy, Malta and Gibraltar which are all members of the European Union. They also hold a Tasmanian gambling license valid to offer betting to all Australia residents. Their awards and accolades are a mile long.
Betfair is one just a few companies to have won multiple Queen Awards, which is the UK’s highest official award for business. Their founders Andrew Black and Edward Wray also won an Ernst and Young Emerging Entrepreneur of the Year award early in their careers. Betfair has fought hard to offer their gambling product around the world taking on several courts and governments. They also have information sharing agreements 30 sports bodies, such as the Lawn Tennis Association and the British Horseracing Association in hopes to spot any potential match or race fixes.
As their name suggests Betfair is all about “fair” betting. Their company even runs a casino where the games have no house advantage. For example a roulette game with no zero, a baccarat game with 2.75% banker commission, full-pay Jacks or Better Video Poker, and a blackjack game where the rules are changed to favour the player and suited blackjacks pay 2-1. This is a company that takes “fair” to the extreme.
Now for full disclosure purposes there have been Betfair complaints. In 2010 they ran a happy hour casino promotion that was a huge mistake. An employee made a horrible decision that costs them millions of dollars in casino losses. Betfair cited “spirit of the bonus” abuse and recaptured most of the funds.
Another complaint comes from “premium charges”. Betfair makes their exchange unprofitable for anyone with £250,000 or more in career winnings, by increasing their commission from 5% to 60%. This move was done to help increase member liquidity and provide more value for the casual punter and smaller professional. The idea here is that the approximately 500 of the 3.8 million registered Betfair accounts that have £250,000 in career winnings are bookmakers or serious advantage players and it is difficult for the casual punter to beat them. The move however is questionable as Betfair could just as easily increased their rate to 10% and gotten more profit, but instead the company has made it rather clear that serious bookmakers (as in those running sharp sports betting sites) are not welcome on the exchange.
These and a few other complaints are the marks against Betfair. They are rated B on our ratings guide. For casual punters they are probably closer to A. Some advantage players and professionals might consider B too generous. In short SBS opinion is this is a safe site to use and as long as you are not winning over £250,000 and triggering the premium charge there is unlikely to be a complaint.