Betfair operate on a different model to most bookmakers where instead of creating a market with prices greater than 100% (which guarantees bookmakers a profit in a liquid market), Betfair takes a percentage of your profit whenever you win. That is called the commission.
The commission on Betfair varies depending which market you bet into. The standard commission on sports and overseas racing is 5%. The commission on Australian racing depends on the code and state the race is held in and starts at 6%.
Price After Commission
The important thing to understand about Betfair is that when you back a team or horse at $2, that’s not the actual price you’re receiving. You’re actually receiving a lower price due to the commission that’s taken away when you win.
Knowing the actual price you receive is important, and luckily we’re here to help!
Your actual price is calculated as follows:
A = B – (B – 1)*C
A = Actual Price
B = Betfair Price
C = Commission
Your actual price is $1.95.
Betfair Or Corporate?
The above equation is important when comparing prices and deciding whether to place your bet with a corporate bookmaker or Betfair.
For example, if a corporate was offering $1.90 and Betfair was offering $2, then you’d back the bet at Betfair because, as we calculated (assuming a 5% commission), the actual price ($1.95) is better than $1.90.
There are examples, of course. where the Betfair price appears better (which has always been a clever marketing strategy from Betfair) but once the commission is removed, it is worse and you should back your bet at the corporate.
Let’s say, for example, your tip has a minimum price of $3.
$3 on a standard bookie would be a bet but we know $3 on Betfair is not really $3. It’s really $2.90 (or something like that). We need to bet at a higher price on Betfair to allow for the commission. But how do we know that price?
Luckily, we have an equation for that:
B = (M – C)/(1 – C)
Punters familiar with Betfair know Betfair only accept prices in $0.05c increments in the $3-$4 price range. Betfair will automatically round up your bet to $3.15. Simply accept that price for a slight improvement on your profit.