Shrewd bettors will always consult an odds comparison service before striking a bet on their fancies. Betting Exchanges however, cloudy the waters somewhat. Traditional bookmakers can easily be compared against one another, but comparing Betting exchange prices to those offered by traditional bookmakers is not always clear cut. Read on to find out why, and what can be done about it.

Betting Exchange Advantages

Historically, betting exchanges such as Betfair offered odds almost 20% larger than traditional bookmakers, but as the betting industry reacted to this new challenge, the gap has closed. Exchanges still offer superior odds on a regular basis, and the volatile state of each betting market also makes them attractive for bettors wishing to trade on their opinions long-term. While the price differences may have reduced, the best value is still frequently found on the exchanges.

They also remain the only viable option for ‘laying’ (betting against) a particular selection. This is an important option for many serious bettors and was one of the major reasons why exchanges began to dominate the industry. In a football fixture for example, a draw could potentially leave a punter frustrated. In order to protect against a stalemate, the only option prior to the betting exchanges would be to back a selection, and back the draw in a separate bet. With the advent of the exchanges, the punter could simply lay the team he was against, and his bet would be a winner if the eventual result was a draw. This opened up opportunities for value bets that had not existed before.

Betting Exchange Odds Comparison

As odds offered by exchanges and traditional bookmakers moved closer, odds comparison services become very important. Getting the best prices about winning selections is an obvious aim – but when certain staking plans are used, getting the best price about losing selections also represents a massive amount of money saved. As an example, with a staking plan that aimed for a £20 win on each selection, a bet struck at 4/1 would mean £5 lost if it were unsuccessful. If 5/1 had been available in a different location, the stake – and therefore subsequent loss – would be £4. These edges become very important over the long term.

So odds comparison is vital, but betting exchanges do not play fair when in direct competition with their traditional rivals due to one simple fact: commission. The percentage paid could vary dependant on loyalty bonuses, special offers or site promotions, but the standard commission at Betfair is 5% – and this reduction is not taken into account in the odds shown.

Commission is paid on winning bets only but the possible reduction in odds could turn what looks like the best price, into the second or even third best. The adjustment gets larger as the odds do, so the disparity can be quite significant. As an example, an away side might be considerable outsiders – but we suspect they are good value. Betfair have them at 5.0 while Ladbrokes offer just 4.85. A £10 win on the exchange wins £40, minus commission of £2 (5%), a net win of £38 (The stake would also be returned of course). The same bet at Ladbrokes returns £38.50 plus the stake. Ladbrokes offer a superior price in this example.

In order to truly compare prices, some maths need to be applied to exchange odds;
((odds-1)*(1/commission rate))+1

For example, Betfair might offer 2.0 on a Chelsea home win, and the commission rate is 5%;
((2-1)*(1/5%))+1 or (1*.95)+1 = 1.95

So when compared to a traditional bookmakers odds, Betfair actually offers 1.95.

These sums are far too complex to be applied to every market that a punter is interested, and the good news is that not only can they be simplified, but after a small of amount of use, they become second nature. To simplify the math, simply reduce the odds by .05 for each whole digit over 1, and estimate the rest, e.g. for odds of 3.0, reduce by .05 twice (3.0 is 2 whole numbers over 1), so 3.0 is actually 2.9, 4.0 is 3.85, 5.0 is 4.8 and so on. Should the level of detail be required, half points can be reduced by .025, so 3.5 is effectively 3.375.

This may all seem a little daunting and unnecessary but nothing should get in the way of a bettor getting the best price about a selection, and once the adjustments have been factored in for a couple of weekends, the process becomes natural. Now exchanges and traditional bookmakers can be compared genuinely.