Major Advantages Offered By the Betting Exchanges
Betting Exchanges offer an excellent alternative to betting with your traditional bookmaker – and any serious racing punter should consider having one or two betting exchange accounts in his portfolio. In addition to enabling you to bet directly against other punters (rather than against a corporate bookmaker) betting exchanges also offer a range of benefits your traditional bookmaking firm can't offer and wouldn't offer even if it could.
Exchanges offer punters bigger prices and better value….
The odds offered about a horse on the exchanges are determined by other punters. They are not determined by a bookmaker.
When a bookmaker sets his prices he needs to build in a profit margin. He has big overheads to pay. The bookie's margin is typically anything from 12% to 25% - and sometimes, big handicaps are an example, the margin is even bigger. In those instances the greedy bookmaker is considered to be 'having a disco'.
On the exchanges the bookmaker has been taken out of the equation. When you take a price on a betting exchange that price is likely to be the best price available anywhere in the jungle. Betting exchanges are competitive environments where the percentages built into prices are razor thin – just above breakeven point.
On the exchanges you are betting directly against other bettors. You are not betting with a bookmaker. There is no bookmaker's margin on the exchanges. Therefore, the odds that you get on exchanges are better than you'll get with your bookie.
Prices are generally 20%+ bigger on the bigger priced horses in any given race. With shorter-priced, more-fancied horses the disparity between the exchange price and the traditional bookie's price is not so big – often only negligible at best when betting exchange commission rates are taken into account. But one thing you hardly, if ever, see is a bookmaker offering a better price than you can get on the exchanges about a short-priced horse. That scenario is rarer than an apology from a politician.
Bookmakers with their mammoth overheads will never be able to offer you the prices you can get your bets matched on the exchanges. If they ever try to compete then the punters will nail them.
Exchanges do not penalise winners
When you bet with a bookmaker he's keeping tabs on you. Every scrap of information he can gather about you is logged in his database. Your betting habits and performance are logged, noted, tracked and analysed – continually – on a day to day basis.
Bookmakers don't like winners. They don't want winners on their clientele list. They only want the mugs, the muppets and the morons – ideally some warped genetic combination of all three. These are the punters who lose long-term – meaning the bookmaker wins long-term. That's the status quo the bookmaker seeks to keep in place, day-to-day, month-to-month, year-on-year.
The minute your betting begins to shape up, and you start to look like a potential long-term winner, then it is going to be noted. Bookmakers employ people solely to make sure it gets noted - fast. If it doesn't happen then somebody's backside is going to get kicked – maybe right out of the front door.
Bookmakers take identifying winning punters very seriously. Their profit margins depend entirely on ruthlessly weeding the shrewd punters out and encouraging them – one way or another – to find somewhere else to bet.
Once you're marked up as a shrewdie you're going to find it increasingly difficult to get a decent bet on with that bookmaker ever again. Your account will be marked up with limits – meaning you'll only ever get laid a proportion of the stake you want to bet. The better the bookmaker thinks you are, the less he's going to let you have on. And, because he knows you're good, and suspects you know something worth knowing, he's grateful for you getting on the phone or on his website and giving him the benefit of your opinion. That's the little cherry on his Bakewell Tart.
On the betting exchanges nobody is monitoring your every move, sizing you up or limiting your ability to bet. Nobody you bet against on an exchange knows who you are, what you bet on or how successful you are. You will not be marked up. You will not be limited. Your account will not be closed down because you are winning. On the exchanges winning is encouraged. You can bet as much as you like – you are only limited to the amount you have in your account. You can win as much as you like. You will not be penalised for it.
Exchanges offer efficient markets
What I mean by an efficient market is that on the exchanges you know what the market knows. What the market knows is reflected in the prices available. That's a serious advantage and one that punters have not previously enjoyed.
When you bet with a bookmaker you haven't got a clue what the rest of the market knows. For a start you've no idea what the market is betting on, at what rate or in what volume. The bookmakers know but that information is not going to be given to you and it never will be. Knowledge is power and in his privileged position the bookmaker has it all his own way.
Bookmakers are also advantaged by their intelligence gathering capabilities. Key punters, stable staff, the connections of horses (including trainers) are reliable indicators of confidence or lack of confidence in a horse and give the bookmaker a priceless steer. They deny it, of course. They like to give the impression of a level playing field. But having worked in the industry, I can tell you that that's the way the industry works. Knowledge is power and the bookmaker has all the knowledge.
On the exchanges every single punter can see where the money is. There are detailed summaries on every market and on every single participant. You can view charts of bet activity. You know exactly how much money has been bet on an event and on a participant. You can see how that money is distributed, how quickly it is arriving and in what volume. You can view the levels of bets matched and unmatched and at what prices.
The prices tell you exactly what the market knows and what the consensus opinion on a race participant and the race as a whole is. A betting exchange is a transparent environment. A betting exchange is a fair environment.
Betting horses to lose – are we in dreamland?
As well as enabling you to back horses as per tradition, exchanges enable you to lay bets. Let's read that again. A betting exchange enables you to lay bets. Thanks to the betting exchanges punters like you and I are able, for the first time in history, to bet on things not happening.
On exchanges we have the option of betting against specific outcomes. And that ability to lay bets is the principle benefit of switching your punting activity to the betting exchanges. It opens the door to avenues of profit that were simply unavailable to you just a few short years ago.
Let's take a fictional 16 runner horse race? To effectively lay the favourite when betting with a bookmaker you'd need to back the other 15 runners. On the exchanges you simply lay the horse you are opposing and watch the other 15 runners run for you.
Exchanges offer you the opportunity to bet against a single participant in a specific event not to do something. That is something your bookmaker can't and won't facilitate. This extra string in your punting bow can be used to unlock profit opportunities that were previously only available to licensed bookmakers.
On an exchange you can protect your stake by hedging your position….
Being able to back and lay an outcome opens up the possibility of profiting from movements in the odds. This is trading as opposed to gambling. That sounds like you need a degree in rocket science. But the principles and the practice, though they take a bit of getting to grips with initially, are pretty simple.
The aim is to back and lay the same outcome at different odds using the same stake. The objective is to make a profit if the outcome occurs but to not make a loss if it doesn't.
Let's say you believe the odds of a participant will lengthen over time. That means you are in a perfect position to lay now at the current odds with the intention of backing the same participant later at the higher odds.
If, on the other hand, you believe the odds will fall then you're all set up to back the participant at the current odds with the intention of laying the same participant at a later time to shorter odds. This is just like going long or short on a stock – for those of you familiar with those expressions.
Now let's say Dingaling is available to lay right now at odds of 1.71. And, let's say you believe the odds on Dingaling will lengthen as the race draws nearer. You lay £100 on Dingaling at odds of 1.71 giving you a payout of £100 if the horse loses and a loss of £71 if it wins.
Your bet:
Stake Horse Odds
£100 LAY Dingaling 1.71
Possible outcome:
If it loses If it wins
You win £100 You lose £71
Later in the day your powers of prediction are proven to be bang-on the mark. The odds on Dingaling have increased to 2.2. You don't think they'll go any higher. So this is the time to lock in your profit. You place another bet. This time you back Dingaling at the new odds of 2.2. You back him to the tune of £100 (the same stake you laid him to at 1.71) at odds of 2.2. This bet gives you a profit £120 if the horse wins and a loss of £100 if it loses.
Your second bet :
Stake Horse Odds
£100 BACK Dingaling 2.2
Possible outcome :
If it loses If it wins
You lose £100 You win £120
Once you've made that bet you can relax, sit back in the armchair and watch the afternoon's racing without a care in the world. How so? You don't need to worry if Dingaling wins or not. Whatever happens you are in a no-lose position. Not sure what I mean? Let's take a close look at those bets you just placed.
What is the situation if Dingaling wins the race? Your first bet – the LAY bet - would be a loser giving you a £71 loss. But your second bet - the BACK bet - would be a winner giving you a £120 profit.
So overall your profit is £49 – the difference between what you've won on the BACK bet (£120) and what you paid out on the losing LAY bet (£71) - £120 minus £71 = £49. That's not a bad outcome, my friend.
And what about if Dingaling loses the race? Well your second bet – the BACK bet - at 2.2 is a loser. That means you lose £100. However, your first bet - the LAY bet - is a winner meaning you get to keep the backers stake of £100. Your overall profit (or loss) is £0. Your position is neutral.
Having the ability to back and lay selections has enabled you to trade your way to a position where you can't lose. Now what bookmaker would enable you to do that? Is it any coincidence that the majority of serious and professional players on Betfair and the other betting exchanges trade in this way rather than gamble?
My advice is don't ever be afraid to protect your stake and guarantee a no-lose book. The first principle of winning is to take steps to minimise or eradicate losses from your betting activity. The history of betting is littered with hard luck stories – horses falling at the final fence when miles in-front, referees awarding dubious penalties, golfers losing their nerve on the final green – where punters had all but spent their winnings before their hopes were so cruelly dashed. When you cover your stake you protect yourself against the vagaries of life in general and sort in particular. When you cover you stake you are immune to losses.
Get guaranteed profits by 'greening up'
In the last Dingaling example I demonstrated the principle of hedging - backing and laying a selection to guarantee yourself a no-lose position.
We can take backing and laying the same participant one step further and back and lay our way to a profit irrespective of the outcome. This process is known as 'greening up'. At first sight it can appear complicated and difficult to get you head round. Everybody struggles with it first time up. The trick is to persevere.
Odds in a betting market are the numerical representations of market opinion given all known circumstances and variants. These odds change constantly, reflecting the ebb and flow of opinion. Now, if you can predict the direction in which the odds are going to move then you've got yourself a a route to profit.
Let's say you expect – for whatever reason – the price of a particular horse to shorten. In that case you back the horse at its current price and, if and when the odds on the horse reduce as you expect, you lay the horse at the shorter price.
If you expect the horse's price to lengthen then you do the opposite. You lay the horse at its current price with the intention of backing it at the bigger odds you expect it to be trading at later.
As we've seen in our Dingaling example, performing either of these manoeuvres locks you into a no-lose position. But you will only make a profit if your horse wins the race. If it loses you don't win a penny – though you don't lose a penny either.
Greening up means that you make a profit regardless of whether the horse wins or loses the race. Greening up means you've got every angle covered and you make a profit whatever happens. Let's have a look at an example of this using our old friend, Dingaling, as an example.
You think the odds on Dingaling will lengthen as the race draws nearer. With that in mind you lay £100 on Dingaling at odds of 1.71 that will mean you a payout of £100 if he loses and a loss of £71 if he wins. That's your position at the moment.
Now let's say your crystal ball has done the business for you once again. The odds drift out to 2.2. You think that's just about as high as the price will get. That's when you decide to green up and lock in a certain profit – regardless of the outcome. You back Dingaling to the tune of £77.73 at odds of 2.2. This bets gives you a profit of £93.27 if Dingaling is first past the post. If the horse loses you lose £77.73.
It's time to settle back into your armchair once more – this time with a much richer sense of self-satisfaction. Go on, son. Switch on that racing and lap it up like the cat with the cream. Because, this time, you are not just in a no-lose position. This time you make a profit whether Dingaling wins his race or not. You can only win.
Check it out. If Dingaling wins the race your back bet wins and delivers a £93.27 profit. Your lay bet loses and that's a £71 loss. Your make an overall profit of £22.27 (£93.27 - £71). If Dingaling loses the race your back bet loses giving you a £77.73 loss. But your lay bet wins giving you a £100 profit. So you make an overall profit of £22.27.
Whatever happens you make a £22.27 profit. And that's trading in a nutshell.
On a betting exchange you can name your own price
Exchanges offer another benefit not previously available to punters. If you don't like the prices available (either to back or lay) about your selections then you can request prices you do like and see if there are punters out there who will match them.
Try asking your bookmaker for a better price than he's advertising. There will be no more than seven letters in the response you get. But on the betting exchanges you get the opportunity to strike bets at prices you set.
Let's say you want to back Red Rag in a fictional race at Newbury on Saturday afternoon. You log on to Betfair early on Saturday morning and see that Red Rag are currently trading at 7.0 (36/1). You think the price should be at least 9.0 (8/1) and so you put in an order for a bet at the odds you fancy – 9.0 (8/1). Your order sits on the exchange until it is matched or cancelled. More often than not – within reason – your bet will be matched by another punter who is intent on opposing yours selection.
It's the same when you're laying (betting that a horse will not win). If you wanted to lay the favourite Blue Moon you might log on and find him trading at 3.0 (2/1). You might not fancy laying that price. You might think Blue Moon should be shorter. So you put in an order to lay at 2.5 (6/4).
And there's another little advantage - Betfair uses a queuing system that matches requests at the best possible odds available.
Let's say you've requested a bet to back a specific horse at 34.0 (33/1) and some other punter suddenly offers to lay the horse at 46.0 (45/1) – then you'll get your bet matched at the odds of 46.0. On the exchanges you always get your bets matched at the best available price. And the best available price on the exchange, as we have seen, is the best available price anywhere more often than not.
Don't ever be shy about requesting higher prices than are available. It is a source of constant amazement to me just how many of my own order get matched when I ask for that little bit more than is available. It's definitely a case of if you don't ask you don't get.
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