Trading and Betting Combat Sports on Betfair
Written by Franco Richard aka Francombat -
Just wanted to share that there's good value to be found in Betfair.com
For some of you who don’t know what Betfair is, this is the world's biggest online sports betting exchange, which operates in similar fashion to a stock exchange. All bets are made on a person to person basis. The way stock exchange traders might set their asking price and amounts is the same way a betting exchange works. Each gambler sets his or her price and amount, the exchange automatically sorts these forming a market place. This gives the option to bet on something to lose, something to win, trade a price movement or make a book - options the average gambler never had before. The betting exchange make a profit by charging a small commission on all winning bets. This commission is generally in the 5% range, which makes it cheaper than a traditional sportsbook.
As you bet with Betfair you build up a discount rate, which reduces the amount of commission you pay on your net winnings from the market. More frequent punters will get a reduced commission which scales all the way down to 2%.
Combat sports bettors will love Betfair because you are not betting against the house but against other sports bettors. You can yourself lay or buy odds at any price. The only requirement for placing a bet, is that some other person is willing to match it. Founded in 2000 and licensed and regulated by the Gibraltar Gambling Commission, Betfair claims that their odds are on average 20% better than those offered by traditional bookmakers. This makes betting on Betfair a really attractive option.
The main attraction of Betfair trading is the ability to generate a profit regardless of the outcome of an event. This is possible through the use of arbitrage and hedging. Arbitrage is a concept that is well known in the stock market and involves buying shares at a lower price and selling them at a higher price. In Betfair terms, arbitrage means "Back High and Lay Low". It doesn't matter which one you do first. In simple terms, you put money on a fighter to win at high odds and then lay the fighter to lose at lower odds. Once you have created an arbitrage situation, you will effectively have created a risk-free bet for yourself. In order to benefit from this risk-free bet, you would still require the bet to win.
Hedging allows you to exploit the arbitrage situation by generating a profit regardless of whether the bet wins or loses. Hedging means that you would lay off the arbitrage profit so that you are in the same financial position whether the bet wins or loses.
Clearly, trading sounds very simple in the sense that you back at high odds and lay at lower odds. The difficulty lies with the fact that it is difficult to find bets where you know the odds will change in the direction that you predict. Trading tends to be very low risk and will therefore only generate low returns. However, it is possible to trade on every fight quite effectively, so the small returns generated will soon build up.
One of the main attractions of betting on Betfair instead of with a regular bookmaker is that the odds offered on Betfair will generally be more favorable to the bettor even allowing for the commission deduction. The reason for this is again fairly simple. Odds offered by traditional bookmakers have an element of profit margin included in the odds in order for the bookmaker to make a sufficient return. Betfair odds effectively have no profit margin included although you need to bear in mind that commission deductions need to be taken into account when comparing odds between Betfair and traditional bookmakers.
To exploit the better odds offered on Betfair, I use a betting technique called Dutching. Dutching involves backing more than one fighter in any event in order to generate the same amount of profit regardless of which fighter wins. The main reason for using Dutching is that it allows you to generate a very high strike rate of winners. Obviously, the odds that you are backing at using Dutching will be much reduced as you are backing a number of selections in an event but the key thing is that you will be able to have a very high strike rate of winners.
Anyone who can guarantee a high strike rate of winners should be able to make money from betting on combat sports by using an appropriate staking plan in order to exploit the high strike rate. I believe that using a Dutching technique with my intended staking plan should generate moderate returns for a moderate amount of risk. Overall, by using both of the strategies above, I hope to be able to carry-out a betting strategy that carries little risk but will provide steady small returns. Therefore, the more events I bet on, the greater the monetary benefit that I should experience (if all goes to plan!).
Betting exchanges are becoming an increasingly integral part of the global gambling landscape, in many cases offering customers much better odds, more transparency, and an experience that feels intuitively fairer. I also like the fact that it's in Euros. It's a natural hedge against the dollar.
Still a relatively new development in the betting industry as a whole, online betting exchanges will continue to be the subject of some discussion and debate for a few years yet. But one thing is clear, online betting exchanges are here to stay.
Now that you know how backing and laying bets on Betfair works, you can click here to sign up to Betfair and claim a potential $200 refund with your 100% first deposit bonus. Also be sure to check out our Betfair review page!
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