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How does Betfair work?

Betfair is a betting exchange where you can place bets against other bettors, instead of betting with a bookmaker.

Betfair is the world’s largest betting exchange with operations in many countries. When you bet with Betfair, you are betting against other punters and Betfair takes a commission on every winning bet placed.

Betfair offers three types of betting strategies:

  • back – betting on a team or horse to win (or an outcome to eventuate)
  • lay – backing against a team or horse (or against an outcome)
  • trade – you trade bets by laying at low odds and backing at high odds when the market shifts. Or, backing at high odds, then laying at low odds later

What is a betting exchange?

A betting exchange, like Betfair, is a marketplace for you to bet on the outcome of events. You can back an outcome, such as your team winning, also known as a ‘buy’. Or, if you think something won’t win, you can place a lay bet, essentially, betting on that outcome not happening.

Betting exchanges take revenue by charging a commission on winning bets.

Australian licensed betting exchanges

Betfair is the only betting exchange that is licensed and regulated in Australia.

Betfair versus bookmaker – what’s the difference?

1

Bookmakers set odds

Bookmakers set the odds for any outcome and state their prices as they wish. Whereas, with a betting exchange, the market (you, the bettor) set odds and wait for another bettor to match the odds. That’s why, generally, prices are better with betting exchanges like Betfair, who claim that the odds are up to 20% higher.

2

Lay bets

Bookmakers only offer odds on teams or horses to win, whereas a lay bet placed on a betting exchange, allows you to bet against an outcome.

3

Exchanges enhance strategy

With Betfair you can implement a hedging strategy and trade bets. This involves you predicting which way the market will shift in order to be successful. Implementing a hedge betting strategy is more cumbersome using fixed odds bookmakers.

Pros and cons:

ProsCons
you can act like a bookmaker and set your own oddsBetfair takes up to 5% commission on any winning bet, which can add up over time
you can generally get better odds with Betfairthe commission taken is not shown in the odds, so the benefit of better odds may be negated by the commission payable on the winning bet (and it makes it harder to calculate your total winning payout)
you can bet against an outcome with a lay bet, rather than just betting on a winwhen setting your own odds, you find limited liquidity, meaning you may struggle to find anyone to match your bet – whereas a bookmaker may accept the bet you want to place
Betfair offers in-running betting, where you can trade bets by predicting market fluctuationsit’s not possible to place exotic bets like trifectas, multis and quaddies, with a bookmaker rather than Betfair, which mostly concentrates on single event betting

Betfair commissions and charges

If you place a winning bet with Betfair you pay a commission, usually 5%. Betfair’s commission rates vary, offering you discounts for your loyalty. The more you use Betfair, the better discounts on commission you can earn. Betfair offers Betfair points with every bet placed, so as you accumulate points, your discount rate improves. Experienced traders using Betfair can get commissions down to about 2%. When you place bets regularly, this discount can have a significant impact on your net gains.

Betfair also uses premium charges for high stakes customers who meet a variety of qualifying criteria, namely betting on multiple markets, making a certain amount of profits and total charges being less than 20% of profit.

Pro Tip

Even if you lose with Betfair, you still earn Betfair points, which contribute to you earning benefits via reduced commissions.

How to use Betfair

Betting with Betfair is simple and easy to learn:

  • Firstly, you need to set up your account and deposit some betting funds.
  • Once you are registered, you are free set to start betting.
  • Simply click on the back or lay bet you want to accept and the amount you want to bet. If you’re happy with the odds on offer, click submit.
  • Following this, your bet will be matched. If you take the price set on screen, most likely your bet will be matched promptly.
  • If you choose to change the odds, you may need to wait for another punter to bet against you. If your bet is unmatched you will receive a refund. Otherwise, your matched bet will be accepted and you’ll either win or lose.
  • If you win, Betfair takes a commission from your winnings.

Placing a lay bet with Betfair

Placing a lay bet with Betfair is quite straightforward too:

  • The pink column offers you the lay bets available for any sporting contest.
  • When laying a bet you can only win the other person’s stake.
  • If you don’t like the price being offered, you can ask for the price you think is fair, and wait for your bet to be matched.
  • Once you have found a match, the bet is finalised and you simply enjoy the contest.
  • If you win, you’ll be paid the amount agreed, less Betfair’s commission.

Tips for success using Betfair

  • Have a betting strategy – create a plan and stick to it
  • Start by betting small stakes, and as you get comfortable with Betfair, increase your investment
  • bet responsibly, never bet what you can’t afford to lose
  • Experiment with trading bets with a buy low/sell high approach
  • Utilise the lay betting function to take advantage of matched betting opportunities
  • Use a back lay calculator to calculate commissions when you are looking for the best odds for your bets
  • Use a calculator for dutching and arbitrage opportunities