Gambling vs Trading
Inspired by the talk going on over on our Bet Dynamo VIP Facebook group, you can join here if you’re not already a member, we want to write a bit today about the differences and some of the pros and cons of traditional gambling on sportsbooks versus trading, i.e. betting, or maybe we should say ‘trading’ on betting exchanges like Betfair, Matchbook etc.
First though we need to explain the differences between them. With a traditional sportsbook you can only take the price that they’re offering when you want to make your bets. So, for example, let’s say Spurs are playing Arsenal on Saturday, you think Both Teams to Score will occur. You then look at the odds with your usual bookie, they’re offering 1.79 and while it’s not a value bet, you still think it will occur so you put £10 on it.
If the bet wins you’re up £7.90, if it loses you lose your stake. With a Betting Exchange it can be a little different. You look at one of the exchanges and their odds for the same bet is 1.85, nice, you think, better odds than the usual lads I bet with. But, you don’t have to take that price, here’s the biggest difference with Betting Exchanges, you can name your own price.
Betting Exchanges Offer Better Odds
Let’s say you’ve calculated your own odds of Both Teams to Score and by your analysis the price should be at least 1.95, that’s still higher than the Exchange price and way higher than the Sportsbook price so on the Exchange you put in a bet of £10 on Both Teams to Score at 1.99. Your bet won’t be matched immediately because the price is currently at 1.95, but if you click on Keep Inplay then the money will be kept in the market until it is matched. You’ve ensured better odds at the price you want. This is the huge advantage of using Betting Exchanges over traditional Sportsbooks.
Another advantage is that traditional sportsbooks have quite large commissions calculated into their odds, something we’ve written about plenty of times before. You can read more about them here. In our Both Teams to Score bet above, the bookie takes all the money from the losing side and even on the winning side they’ll have taken anything from 6-12% because if we calculated their overround the the ‘fair odds’ would be more like 1.82, than the 1.79 they offered.
With the Betting Exchanges though you’re charged a commission on your winnings, usually 5%, so lower ‘charges’ than with your normal bookie and, if the wager loses, no commission…usually. Matchbook do add a commission into some ‘lay’ bets but not in all markets.
Largely thanks to the success of the Cash Out feature on Betfair, many traditional sportsbooks are now offering a cash-out feature. Let’s say you made a bet of £10 on Over 2.5 goals at 1.95 on an Exchange for an upcoming Chelsea vs Manchester United match. Chelsea are 2-0 up after 30 minutes and the price is now down at 1.20. You have a few choices now on the Exchange.
You can keep your full stake in the market and hope for one more goal. You can remove your stake, meaning you take back your £10 and should there be another goal you’ll make a decent profit, if the match ends 2-0 you won’t have made a profit, but you won’t have lost anything either (something called a ‘scratch trade’). This is a popular strategy on Betfair, ensuring that you protect your bank. Thirdly you can cashout, but we should put an asterix here, the Cash Out odds you’ll be offered aren’t always the ‘fairest’ price, so play around with the odds until you’re happy with what your return will be and then cash out. With most sportsbooks you don’t have this option and if you want to Cash Out you have to take what they’re offering.
What is Lay Betting?
We’ve not even spoken about Laying yet, one of the major features of betting exchanges, this is basically betting against an outcome. So rather than Betting on Under 2.5 goals, you can Lay Over 2.5 goals for better odds. A particularly popular lay strategy is called Laying the Draw, something we’re written about here.
Laying is huge in football betting and even bigger in horse racing. Laying in tennis is massive as well, one strategy in particular is to lay the winner of the first set when the second set begins as the player who is down a set must put up a fight and win back a few games. Laying is horse racing seems easy, picking a loser, but it’s not nearly as easy as it sounds.
The biggest advantage though of Trading over traditional betting is that you can take profit sooner. If you make that Over 2.5 goals bet mentioned above you have to wait for the three goals to be scored before you can take the money. And, if the sportsbook does offer a Cash Out option it’s rarely, if ever, a true reflection of what the odds should be. By trading and using the Exchanges you can ensure that profit can be locked in. If a match goes against you and it’s 0-0 until the dying stage you can still get out of it with some of your stake with an exit strategy, with a traditional bookie your wager is gone.
It all comes down though to the type of sports bettor you are. If you’re more of a recreational bettor and you’re happy to put on the odd acca and hope for the best then sportsbooks are for you, if you’re more interested in making small profitable trades/bets over the long term and protecting your bank then trading is something you should certainly think about.