Bookmakers Vrs Betting Exchanges

You will never beat the bookmaker, but can you beat the exchange?

I grow increasingly irritated at claims made by fraudulent characters claiming they have the ‘Never before seen’ system which is ‘guaranteed’ to make you money from horse racing.

We’ve all seen these claims in the past. The headline “Want to quit your job and earn £5000 a month?” is usually enough to get your attention. Once you get to the nitty-gritty of the opportunity, and are confronted with “pay me just £100 and I’ll make you rich with my totally new system”, the more discerning reader will move on. However, those unfortunate enough to be ‘pulled in’ to such a claim, will invariably fork out the cash, only to find they are handed a system which doesn’t even come close to it’s seller’s claims, or even worse, causes you to lose even more!

The only way you will ever make money betting traditionally is if you have some form of inside information, an extensive and thorough knowledge of the industry (which can take many, many years) or are just plain lucky.

So we may as well just give up betting altogether then?

Well as far as betting using the traditional method is concerned…yes!

But can you make money from betting exchanges?

Well this is an entirely different story. We should first mention the significant differences between betting traditionally, and betting on the exchanges.

1. You can lay a horse on the exchange

This is the single biggest and most significant difference between betting traditionally and betting on the exchange. You can effectively act as a ‘bookmaker’ yourself by betting a horse will lose. Let’s say we have an 8 horse race. If you bet on the favourite to win the race, you mathematically have a 1 in 8 chance of a winning bet (of course this is not true in reality, I am merely speaking mathematically here) whereas if you Lay the same favourite (Bet the horse to lose) then “mathematically” you now have a 7 in 8 chance of a winning bet.

2. You can bet on a horse to place on the exchange.

Please note that this is NOT the same as placing an each-way bet with a traditional bookmaker. An each-way bet basically takes half your stake and places it on the horse to win, and the other half for it to place. If you are looking to bet on a horse that you are certain will finish in the first three, but would be pretty lucky to actually win the race, then you could bet on the exchange as follows:

EXCHANGE
£10 back on Hurricane Run to place at odds of 1.25
Return if Hurricane Run places 2nd = £12.50 (minus exchange deduction)
BOOKMAKER
£10 bet (£5 each way) on Hurricane Run at equivalent odds of 1.25
Return if Hurricane Run finishes 2nd = £6.25

3. The odds on exchanges are around 20% better than bookmakers.

To put it simply, you’d have DOUBLED the amount of profit over the course of 5 winning bets with an exchange, had you placed those same bets with a traditional bookmaker.

4. You can bet in-running with exchanges

Betting with exchanges allows you to place a back or lay bet whilst the race is still going on. Many exchange punters keep their finger hovering over the mouse button whilst watching a race, in order to place that last second bet on a horse they have spotted in 5th place blazing down the inside race with 2 furlongs to go!

5. You can use software to help you place bets automatically on exchanges

This topic will be covered in further detail in a future article, but it is worth mentioning. I’d highly recommend MarketFeeder Pro as the software allows you to create your own betting strategy’s using Microsoft excel, and because it is officially registered with Betfair and Betdaq, you can do many things that standard exchange users cannot. For example, you can place bets for as little a 1 penny per race (as opposed to the minimum £2 bet you’d have to normally place) which is invaluable when you’re testing out various betting strategies. If you don’t have the knowledge or experience to set up strategies yourself, then it may be worth considering an automated software solution, such as Auto-Betfair.

6. Exchanges allow you to Back All/Lay all

This technique is used in conjunction with over rounds and under rounds and deserves its own article.

7. The exchanges are happy when you win!

Unlike traditional bookmakers who grow frustrated (and often suspicious!) of customers who continually win money, the exchanges are delighted when you win. Exchanges earn money by taking a very small commission from every winning bet. The beauty of this is that when two parties bet against each other, there is always going to be a winner! (As far as I’m concerned the guys behind Betfair and Betdaq are absolute geniuses!)

8. Quicker Price fluctuations on the exchange.

The odds offered by traditional bookmakers tend to change as quickly as exchanges. This rapid change on the exchange is vital in spotting the direction the odds are going. Using this information allows you to often secure arbitrages. (Please see my article on spotting arbitrage opportunities)

In conclusion, it is nigh on impossible to beat the bookmaker, but earning money on the exchange is an entirely different matter when you consider the facts above.