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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, or the starting price (Betfair SP) product.

These days Betfair is a worldwide force, offering sophisticated bettors the opportunity to bet with ease, at significant volume and often at low margins.

Newcomers to the betting world are often overawed and even confused with Betfair. But it’s not complicated, and there’s certainly rewards for using it!

Betting Exchange

Unlike your traditional bookmaker who takes your bets directly, Betfair operates as an exchange. Bets are placed directly with another person via the exchange. In it’s purest form, one of punters thinks a horse will win, while the other thinks the horse will lose. They’re betting against each other. Just like you would place a bet with a mate. Only Betfair allows this on a grand scale.

The price you are receiving is the odds agreed to by the other punter. For their trouble, Betfair takes a commission on the winning transactions.

As Betfair is effectively just a matching algorithm, it welcomes winning punters – 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 SP.

Betfair Starting Price (Betfair SP)

As the name suggests, Betfair SP is Betfair’s 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. Like a tote bet, you’re not taking a fixed price. The Betfair SP is a true market price: backers and layers enter their stake for their horse as desired, with the price simply calculated by the weight of money on either side. Of course, this means the price is moving all the way up until the race jumps, as money enters either side of the market for each runner. To quote from Betfair’s website:

The actual logic of how Betfair arrives at the final BSP number is quite complex and for a few reasons you won’t be able to perfectly replicate it at home. However, the general gist of the BSP reconciliation algorithm that is executed just as the market suspended goes something like:

The algorithm combines 4 distinct groups of open bets for a given selection:
(1) Non price limited BSP orders on both the back and lay side (market_on_close orders)
(2) Price limited orders on both the back and lay side (limit_on_close orders)
(3) All non filled open lay orders
(4) All non filled open back orders
It then combines them all together, passes a sophisticated balancing algorithm over the top of them and arrives at a single fair price for the BSP that balances the demand on either side of the ledger

Winners are paid out at the final starting price, with Betfair deducting commission from the winnings in the same way as exchange betting.

Betfair SP: Putting your bet on

This really couldn’t be easier. Below is what you’ll encounter when accessing a race on Betfair.

how to use betfair

For each horse, the Blue section (on the left) is for backing, and the pink section (on the right) is for laying. If you wish to use Betfair SP, you just click the ‘SP’ button (blue for backing, pink for laying) and enter your stake. And you’re on!

Betfair SP: Odds limit

One very useful feature of Betfair SP is the ability to set an odds limit: a minimum price for backers, and a maximum price for layers. This allows you to enter your Betfair SP stake ahead of time as usual, but only have the bet placed if the price reaches your desired limit.

This is done by selecting “Set SP odds limit” in the betslip, and entering your price. For example, you may back a horse at SP on the morning of a race, but set an odds limit of $5. In that case, if the SP pays $5 or greater, the bet will be placed as desired. If it pays less than $5, the bet won’t be placed.

This is obviously an extremely useful feature for those working with a rated price.

Many knowledgeable punters refer to Betfair SP as the true “market price”, as it’s not corrupted by anything: it’s purely money from backers and layers.

Betfair SP will often pay a higher dividend than the totes. This is particularly the case at the longer end of the market, where Betfair SP will generally pay a lot more than the totes.

Betfair SP is also a more convenient option as bets can be placed at any time. All of this makes BSP a very compelling alternative to more traditional tote betting.

Watch: How to use Betfair SP

This quick video demonstrates how to place a bet with Betfair SP. It’s split into two sections: placing a regular Betfair SP bet, and placing one with a minimum odds limit.

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 the 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. Commission rates on Betfair winnings for thoroughbred racing in Australia currently range from 5% (South Australia) to 10% (New South Wales).

For consistent punters who target low MBR markets like South Australian or Victorian racing, Betfair SP will, on average, present a better price than products like Top Tote. And the bonus is you don’t ever have to worry about getting restricted.

Want to learn more about Betfair? Head here.

Punt like a pro with Trevor Lawson’s Melbourne Ratings.

As well as a full set of rated prices, speed maps and suggested bets, you can spend each and every raceday with a pro punter: the Melbourne Ratings Live Page gives you direct access to Trev himself to ask whatever you like.

If you're keen to win, it’s the only way to punt.

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