Even though Betfair has been around since 2000, many casual Australian punters still haven’t used the exchange and many more simply don’t understand it.
These days Betfair is a worldwide force, offering sophisticated bettors the opportunity to bet with relative ease, at significant volume and often at low margins.
Newcomers to the betting world are often overawed and even confused with Betfair. But for those willing to take the time to understand it, there are some decent rewards on offer.
Unlike your traditional bookmaker who takes your bets directly, Betfair operates as an exchange. Bets are placed directly with another person via the exchange, so you can in fact become the bookmaker.
The price you are receiving on your runner of choice is effectively that of the market as a whole. For their trouble, Betfair takes a commission on the winning transactions.
The big advantage of using a platform like Betfair is that you can’t be restricted, which is in stark contrast to many Australian corporate bookies who have little regard for winning punters (or even break-even ones) and quickly restrict their accounts to the point that they are not viable to use.
As Betfair is effectively just a matching algorithm, it welcomes winning bettors – in fact it encourages them because the more you turn over, the more money Betfair makes.
Back & Lay
When you place a bet on a horse to win (like you would with a traditional bookmaker) you’re doing what is known as ‘Backing‘.
If you’re predicting a runner to not win the race, you can ‘Lay’ it whereby you effectively adopt the role of bookmaker.
Bets are placed through the exchange and most of the heavy betting happens in the final 10 minutes prior to the jump.
So the Betfair exchange is well worth the attention of any semi-serious punter, however there’s another lesser known Betfair betting product that can also help punters improve their edge.
Betfair Starting Price
As the name suggests, Betfair SP is their version of the starting price. However in many ways (other than the percentage takeout) Betfair SP is probably more comparable to the tote.
Betfair SP offers punters the ability to place their back or lay bets as early as they’d like. All the bets are pooled together and matched against the other bettors after the jump, when all bets are in.
The Betfair exchange offers savvy punters the ability to get better prices and get ahead of any late plunge that might occur. However that requires actively monitoring prices in the lead-up to races and in most cases requires the use of third party software to consistently achieve good prices.
Using the SP is a more convenient option as bets can be placed at any time.
The main reason punters need to consider using a product like Betfair SP is because of the lower costs associated with it relative to other comparable products like the tote.
Betfair SP has no built in margin, so the percentage chance of all runners adds up to exactly 100%. The final price is based on a complex algorithm then calculates the Betfair SP for all runners.
Contrast that 100% market (prior to your commission charge) to the various totes which have takeout rates in the range of 17-18% or more.
As always the devil is in the detail. As Betfair is an exchange, they get their edge by charging a commission on winning bets.
The rate they charge depends on what event you’re betting on and in the case of racing, which state the race takes place in.
MBR – Betfair
The rate of commission is determined primarily by how much Betfair is required to pay to the state racing authorities.
NSW thoroughbred racing is a particularly un-competitive Market Base Rate due to the high rates paid to Racing NSW. Whereas the non-V’landys states are at 6%, with the exception of WA at 8%.
For punters that turn over significant volume these market base rates (MBR) get reduced.
As you bet more on any Betfair events, you accrue points which entitle you to a discount on your commission. These discounts go as high as 60%, which can reduce a 6% MBR down to decent levels. That is the good news, whilst the bad news is if you start making too much from Betfair you’re likely to become eligible for their much-derided premium charge.
Betfair SP vs Totes
Ultimately the decision as to whether to use a product like Betfair SP or the totes comes down to what gives you the best price on your bets.
If you’re betting straight into the tote and paying an 18% takeout rate, then you would likely be better served by moving your betting over to Betfair SP. Depending on your overall turnover and which state you are wanting to bet into, you have the potential to improve your edge significantly.
For consistent punters who target low MBR markets like Victorian Racing, Betfair SP will on average present better option than products like Top Tote and the bonus is you don’t ever have to worry about getting restricted.