what is a betting exchange betfair

Betfair Exchange | The Betting Exchange Explained

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How Does The UK Betfair Exchange Work?

The Betfair Exchange is a platform where people both buy and sell bets. Think of it as a stock exchange but for betting. Odds fluctuate depending on how many people are buying a bet (Sydney FC to win a match)for example) if a lot of people are buying the bet that they will win then their back odds will go up, if a lot of people are betting they will not win then the odds will come down.

Some people are buying and others are selling. The price fluctuated depending on how many people and how much money is placed on each side. The Betfair exchange doesn’t buy or sell bets, it simply acts as a middleman and provides the platform for me and you to trade bets.

Instead of buying and selling like a traditional market, we use the terms backing and laying. Betfair are the biggest betting exchange in the world and have more users by far than anybody else. This means that they have a lot more liquidity. This just basically means that enough people are on there for use to have bets to buy and sell for most games.

An Example;

  • Frank is keen to place a bet on Fremantle to win a match, Timmy believes they will lose the game.

They each log into their Betfair accounts.

  • Frank wants to place a $10 bet and believes at odds of 3.0 (2/1) seem reasonable. He wants to win $20 for this bet if Fremantle win.
  • Timmy logs in and as he believes Fremantle will lose he agrees that these odds are accurate so he places a $10 lay bet at these odd.
  • If Fremantle win Frank will get his $20 net profit and his original $10 original stake back. Timmy will of course lose his liability amount of $20 to Frank.
  • However, If Fremantle do not win (lose or draw options both covered) Frank will lose his $10 and Timmy will win that $10 and of course not lose any of the liability he risked.

Simply put, the person placing the lay bet and risking liability and acting as the bookmaker.

Is Betfair Legal In Australia?

Yes, The Betfair Australia betting exchange is the Australian operation of the web betting exchange, Betfair. Established in 2005, Betfair Australia operates Australia’s only betting exchange under a Tasmanian Gaming Licence. 

What is a Lay bet?

The bookmakers are the standard betting companies that you go on to place a bet for a selection to win. This is called a back bet as you are backing a selection to win. If this selection wins then the bookmaker will pay you the amount you have won.

Betting exchanges are different as they also let you place bets against a certain outcome happening. This is of course the lay bet. There are very different. For example in a soccer match there are 3 outcomes

(Team A Win – Draw – Team B Win)

NB. You back with the bookmaker (eg. Ladbrokes, Sportsbet) and lay against the outcome with the exchange. (Betfair exchange)

Betfair Exchange Australia Lay Bet Example

This is important because to place our bets with no risk we obviously need to cover all outcomes. So we can back team A to win with the bookmaker and then on the exchange bet that this outcome will not happen. This covers the possibility of both the draw and a team B win.

There a tons of betting exchanges out there but I use Betfair because it's the most mainstream and usually has the most liquidity. I would recommend starting out with these for simplicity sake if you are unfamiliar with the world of betting exchanges, it also has the most amount of liquidity. I will be using it in all examples where I mention the exchange.

We need the back and lay to have odds as close as possible, usually the odds on the bookmaker are slightly worse so you make a small qualifier loss each time. This is to be expected and we aim to keep this loss under 10% at all times (Qualifying loss) . Then when we extract the cash from the bonus we will have even more net profit. (explained later)

You can find out more about lay betting on Betfair here if you're still lost.

Betfair Exchange Commission Rates

If you lose with the exchange and your bet wins with the bookmaker instead then there is no commission.*

The Betfair Exchange does not create their own odds The odds at the Betfair exchange are created by the users of the site backing and laying on events. Simply put, If a lot of people back the same team to win then the odds will naturally go down.

If the majority of people want to lay against a team winning then the odds will go up. As the market on Betfair Australia is dictated by actual punters and not set with the added advantage a bookmaker gives themselves, this means that the odds at the Betfair exchange are generally better than that of a traditional bookmaker.

The exchange does not directly profit from these bets that people place against each other, they are basically a middle man. So they get their profits from adding a small commission on your profits. The current commission rates for Betfair Australia.

For most sporting events Betfair has a basic commission rate of 5%, but you can bring this down by earning Betfair points. This happens the more by placing more bets with them.. With matched betting you can expect to place a lot of bets knowing you wont lose, this helps us get a better commission rate over time.

We have a variety of commission rates for horse racing in Australia. This is because each state charges the Betfair Exchange a different rate to operate in the state. This means we have to pay more depending on the races are taking place

What is the Betfair Commission for Horse Racing?

These rates are important to know when you are completing the daily offers for the weekend 2nd and 3rd place promos.

  • 5% for New Zealand and the rest of the world
  • 6% for Victoria, Queensland, Tasmania, Northern Territory, South Australia, ACT
  • 8% for Western Australia
  • 10% for New South Wales (Racing at Randwick commission is is 10%)

Commission on the Matched Betting Calculator

When you are matched betting you can leave the back bet commission at 0 but the lay bet commission needs to be set to the value that you are charged by Betfair Australia.

So depending on the event as explained above. Here you can see i have set the commission on this bet to 5%, this would be normal for a soccer match.

As always, if you have any questions feel free to ask in the Facebook group here or just leave a comment below.

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Betfair Exchange Australia
The Betfair Exchange is a platform where people both buy and sell bets. Think of it as a stock exchange but for betting. This gives us the perfect platform for arbitrage and matched betting in Australia.
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Matched Betting Oz
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