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Some basics on betting exchanges such as Betfair, Betdaq and Allsportsmarket. I hope to add some thoughts on betting techniques and strategies soon.


You will almost always be able to get better odds using a betting exchange than are available at conventional bookmakers such as Ladbrokes or William Hill. This is because they have substantial overheads to cover while on a betting exchange you are betting with other punters. For example, at 1045 on 24 September 2005 the prices available to back horses in the Queen Elizabeth II Stakes, the 1620 at Newmarket were

William Hill Betfair Difference
Dubawi 2.62 2.66 1.5%
Starcraft 3.25 4.3 32.3%
Rakti 3.5 4.1 17.1%
Mullins Bay 12 13 8.3%
Sleeping Indian 15 14 -6.7%
Blatant 201 310 54.2%

So, better odds were available on 5 of the 6 runners but, in one case, not enough to cover likely commission costs.


Donít forget that a betting exchange also have costs to cover and will charge you commission, usually on your net winnings on any Ďeventí. Each book they run is treated as a separate event so your winnings on the winner of a race will not be offset by any losses on the place book. This netting means it is better to make a small profit on each event than a mixture of wins and losses. At 5% commission, winning GBP 50 by taking GBP 5 on each of ten races will cost 5 x 10 x 5% = GBP 2.50; winning GBP 20 on 5 races and losing GBP 10 on 5 races gives the same gross result but costs twice as much, GBP 5.00, in commission.

Decimal odds and probabilities

While traditional odds like 7-2 and 100-30 have a certain olde worlde charm, it is much easier to think and do any calculations using decimal odds. Most on-line betting sites have a switch to click to use decimal odds. To convert traditional odds to decimal divide the first number by the second and add one. Examples - 7-2 => 7/2 + 1 =>3.5 + 1 = 4.5 100-30 => 100/30 + 1 => 3.333 + 1 = 4.333 Evens => 1-1 => 1/1 + 1 => 1 + 1 => 2 The reciprocal of the decimal odds is the implied probability. For example 1 / 4.5 = 0.2222 is the implied probability of a 7-2 shot winning.

Over and under-round

This is a measure of the amount of Ďprofití built into the odds on offer. Adding all the implied probabilities for the possible outcomes gives a number around 1. Expressing the difference from 1 as a percentage gives the under or over-round. In the example above, the over-round for William Hill is 13% and for Betfair 0.4%:

William Hill Betfair Difference
Dubawi 38.2% 37.6% 0.6%
Starcraft 30.8% 23.3% 7.5%
Rakti 28.6% 24.4% 4.2%
Mullins Bay 8.3% 7.7% 0.6%
Sleeping Indian 6.7% 7.1% -0.5%
Blatant 0.5% 0.3% 0.2%
Total 113.0% 100.4% 12.6%
Overround 13.0% 0.4% 12.6%

So, to back all the horses in proportion to their implied probabilities to win GBP 100, you would have to place £113 pounds with William Hill or £100.40 with Betfair. This calculation doesnít include commission because you donít pay any when youíre guaranteed to lose but donít forget that 5% on your net winnings!

Back and Lay

If you think a horse is going to lose you can also lay it on the betting exchanges. With a conventional bookmaker you would have had to back all the others runners to give the same result.