How much better are the odds given at betting exchanges compared to bookmakers?
What effect does commission have and what price are we really getting after commission has been paid on winnings?
As a winning sports bettor, you want the best price you can get for your selections: this means you need to be able to compare the prices given at betting exchanges such as Betfair and those given by bookmakers such as William Hill.
Generally, bookmakers will give you set odds: you back at a price and your return on a winning bet will be your stake x the price (eg, a £5 winning bet at 2.0 will give you £10 return, including your original stake back).
Betting exchanges, however, will charge a commission on your winnings, often between 2% and 5%. So, whilst you may back at 2.0, you won’t get the same return as you would at a bookmakers.
Does this mean that you should place your bets at bookmakers instead of betting exchanges? Not at all, betting exchanges often have higher prices on offer, far greater flexibility (you can request different prices and trade out of positions before the match as well as in running) and allow you to take either side of the bet by backing or laying.
What you do need to know when you have decided to back a team (or back the draw) is which online bookmaker/exchange will give you the best odds.
To help you with this, there is a free betting value calculator available to download here which, amongst other things, will calculate the price you’re getting after commission.
The working for this is as follows:
1) Work out your gross return by multiplying stake by price (£5 x 2.0 = £10)
2) Take away your original stake to get your gross winnings (£10- £5 = £5)
3) Multiply by the % you keep after paying commission to get net winnings (£5 x 95% = £4.75)
4) Add original stake to get net returns (£5 + £4.75 = £9.75)
5) Divide net return by stake to get price net of commission (£9.75 / £5 = 1.95)
So, a betting exchange offering a price of 2.0 but with a 5% commission is equivalent to a bookmaker offering 1.95 for the same outcome.
To restate, this does not mean bookmakers are better, but value bettors must be aware of the real price and the real return that they will get.
Help yourself to the free betting value calculator to quickly work out this price.
