High street bookmakers ruled the roost when it came to gambling in the UK and this trend continued when sports betting moved to the internet, with companies such as Ladbrokes and William Hill still enjoying the bulk of the online business. However in 2000 the Betfair betting exchange hit the marketplace and would in many ways change the gambling industry completely. A decade and a half on, and the bookmakers and Betfair are still engaged in a healthy competition. It would be fair to say that the bookmakers now make use of many of the best features of Betfair and Betfair have now made the move into bookmaking with their own sportsbook – so there are many more similarities between the two than there were fifteen years ago, however there are still key differences.
In this article I concentrate on the betting exchange part of the Betfair business and make a comparison with the traditional bookmaker model. I look at the pros and cons of both in a number of areas, and finish with some suggestions as to how you can combine the two to maximize your gambling profit. In this article all the examples will be in decimal odds. To change decimal to the more traditional fractional odds subtract one from the decimal price – for example 7.0 becomes 6/1.
Bookies v Betfair - Pricing
In general you’ll find better prices using the Betfair exchange. This is because users of the exchange and particularly layers can work to very small margins, meaning that many of the books will be close to 100% - a 100% book being one where the layer/bookmaker has no profit margin whatsoever. Bookmakers however have larger overheads, meaning that their books will be larger than 100%, in some cases markedly so. You’ll find the prices on strong favorites somewhat similar on both bookmakers and Betfair, maybe with a small edge in Betfair’s favour. However for longer odds bets, you’ll generally find significantly better prices on the exchange.
Bookies v Betfair - Charging
When betting with a bookmaker you’ll be given a price and if the bet wins you’ll win the expected amount. For example, if you back a horse at 9.0 for £5, you’ll have a return of £45.
When betting with the Betfair exchange, it can be a little more complicated. Firstly you’ll be charged a commission on the winning amount. This amount is dependent on how much you use the exchange but ranges from a starting point of 5%. You might have backed the same horse at odds of 11.0 for £5 at the exchange, meaning a return of £55 and a profit of £50. However you’ll pay the commission on your £50 winnings, so your winning amount is reduced to £47.50 and your overall return to £52.50.
In addition to the commission charge there is a premium charge, which very successful users of the exchange may incur. This charge is based on overall profit and loss on the exchange and can be as high as 60% of total winnings. This is more generally aimed at automated users of the site who have highly successful systems, however all users could incur the charge.
Range of Betting/Live Betting
There was a time when Betfair certainly led the way in the amount of bets on offer at a site. However the sportsbooks have certainly caught up in this regard and in some cases they offer more markets. The sportsbooks do actually have an advantage in this area in that they can offer prices on as many markets as they can, whilst Betfair need users to make a market viable by offering prices, so might not offer quite as large a range of bets as a site like Bet 365 for example.
Betfair practically started many of the live betting markets and still lead the way in many respects, particularly when it comes to live horse racing betting. However, the bookmakers now offer up to date odds throughout many events and compete with Betfair on a level playing ground.
Multiple betting is an option on the Betfair exchange, however the range of betting is limited to certain markets – the exchange offering a much better service for backers of single bets.
Bookmakers specialize in a great number of multiple markets, where you’ll easily be able to place multiples across different bet types or even different sports. When it comes to multiples, bookmakers have the edge.
Bookmakers versus Betfair - Overview
It’s clear from this article that both bookmakers and Betfair have their own advantages. If regularly backing long priced single bets, there is no doubt that you’d be better off using the exchange. If a backer of low priced multiples, you’ll find it much easier with a bookmaker – of course Betfair have their own sportsbook now as well, so certainly check the prices out there.
Ideally, the modern day gambler should make use of both, trying to gain the best price on a market they can, whether that be with Betfair or a sportsbook. Check out the prices on the exchange, work out what the odds are after commission and then compare these with the bookmaker’s odds. If you always ensure you are gaining the best price you can, you’ll have an edge over the competition.
Extra tip: If you start a regular account at Betfair sportsbook (taking advantage of their generous free bet deals), it will not be long before they offer you extra incentives to check out the exchange - the best of both worlds. See www.betfair.com for the latest deals.