How Does Betfair Exchange Work
Unlike traditional bookmakers, Betfair makes its income from commission. For every bet settled, a small percentage will be taken from the net winnings. That percentage varies primarily according to what Betfair rewards package you have chosen, but could also be impacted by your discount rate based on Betfair Points you’ve earned by betting, and by what county you live in.
- How To Use Betfair Exchange
- Betfair Exchange Au
- Betfair Exchange
- How Does Betfair Exchange Cash Out Work
Why commission saves you money
Betfair was founded in 2000 by Andrew Black and Edward Wray. Its revenue as of 2014 was £393 million. It was the first betting exchange to float on the London Stock Exchange, up until its merger with Paddy Power in 2016. Two exchange platforms would become popular, that is Flutter and Betfair. Based on the idea of the stock market exchanges, they offer the gamblers the opportunity to aggravate between them. Just like the share owners sell stocks. In the exchange language the seller is.
Charging customers a nominal commission means that the Betfair Exchange needn’t rely on profit margins to make its money. For most fixed-odds, ‘sportsbook’ bookmakers, it’s necessary to build a profit margin, or ‘over-round‘ on their prospective prices for each horse in a race*. By compiling their own books, this means the bookmakers can guarantee themselves a profit, regardless of the outcome – they have made their own green book.
The Betfair Exchange meanwhile relies on backers and layers being matched against each other, the perfect point where supply (layers) meets demand (backers) to create a ‘true’ price of an event happening. Because of this pure market place margins are kept very small, and the price you get is very often a better one – commonly over 90% of horses are best-priced on the Betfair Exchange. So, in most cases the added pay-out more than makes up for what you pay in commission.
*In practice, sportsbooks cannot truly reflect each horse’s chance of winning owing to multiple other considerations they must factor into a horse’s price. Concessions such as best odds guaranteed, each-way terms – and extra places if they decide to increase from the standard place terms - and any other headline promotions they might be running (for example Money Back if horse X wins). All of these additional ‘costs’ will likely be factored into a sportsbook price through added margin, meaning punters are not getting a true reflection of a horse’s chance of winning unlike on the Betfair Exchange, where the market place is stripped of all those sorts of additional considerations and merely reflects the true chance of a horse winning the race. The art of finding over-priced horses is known as value betting – which is exactly how our Jury and TV focus tips work.
How To Use Betfair Exchange
How much commission do you pay on the Betfair Exchange?
Betfair Exchange customers in the UK and Ireland who don’t opt into My Betfair Rewards (and so are placed in the standard ‘Rewards’ package) will pay a maximum of 5% on their net winnings (there’s no commission paid on the returned stake). My Betfair Rewards has replaced the old Betfair Points calculation, meaning customers have more freedom to choose a commission level that suits their betting. This personalisation of the commission structure means customers have the choice to pay either 8%, 5% or 2% commission on Exchange winnings. The Rewards+, Rewards and Basic packages all comes with various add-ons to help tailor your Betfair experience to your preferred way of betting. You can fund full details of what’s included with all three packages here.
How is commission worked out?
In simple terms, it’s deducted from your winnings. Let’s say you’ve chosen the Rewards+ package on My Betfair Rewards and are paying 8% commission on your Exchange winnings.
At Cheltenham in March you place a £10 back bet on the winner of the Gold Cup at odds of 10.0 (9/1). That means you’ll win £90 + £10 stake = £100 before commission. Your 8% deduction is made off the £90, meaning you’ll actually win £82.80 + £10 stake = £92.80.
Over the last 10 years at Cheltenham the Betfair Exchange has been best priced on 94% of all runners, AFTER commission. So you’re still highly likely to be getting the best price in the market, even after you’ve paid commission.
If you decide to opt-in to the standard Rewards or Basic package and thus pay just 5% or 2% commission respectively, then in the above example you’ll end up like this;
Betfair Exchange Au
Winning Horse Odds Winnings Pre-Commission (£10 stake) My Betfair Rewards Commission Deductions Winnings Post-Commission Total winnings (inc. £10 stake)
10.0 (9/1) £90 Rewards+ = 8% commission £7.20
= (90 ÷ 100) x8 (90 – 7.20) = £82.80 £92.80
10.0 (9/1) £90 Rewards = 5% commission £4.50
= (90 ÷ 100) x5 (90 – 4.50) = £85.50 £95.50
10.0 (9/1) £90 Basic = 2% commission £1.80
= (90 ÷ 100) x2 (90 – 1.80) = £88.20 £98.20
Can I change my chosen package?
Yes! At the start of each month, you can switch your My Betfair Rewards package, allowing you to move freely between Rewards+, Rewards and Basic. But remember, you can do this just once a month. Simply log in to your Betfair account, visit My Account and chose My Betfair Rewards from the Promotions & Rewards menu option.
So what are Betfair Points and do they still exist?
Betfair Points were the system that was used to calculate commission payments before the launch of My Betfair Rewards. While they no longer exist for the calculation of commission like you may be used they are still accrued as there are some areas where Betfair Points are still needed;
1. All UK and IRE customers will now be using My Betfair Rewards for their commission structure. Some international jurisdictions will also be taking advantage of My Betfair Rewards. However not all International territories are, and so in those areas the old Betfair Points system will still be in use.
Betfair Exchange
2. Customers betting on events taking place in Australia – think Melbourne Cup, Australian Open tennis, Big Bash and Test Cricket, etc – will have Betfair Points used to calculate commission, regardless of if they’re using My Betfair Rewards day-to-day. More information about this can be found here.