Here is an interesting question asked by Vivek at Betting Adda website. In the interest of general public I’ve reposted this question here in order to demystify this question which always pops up in any new trader.
Bhai since Betfair is an exchange and not a pure bookie site still why the odds are the same (just slight better) and you said sucking money out of bookies is tough.Agreed.But on exchange we are betting with each other then also i feel like betting with an bookie?Why is so
This is the most obvious question which every new trader at Betfair will ask to himself at some point of time. It’s good that you asked me. Normally new traders are shy to ask such question to avoid being declared noob.
The reason why you asked this question is very obvious. You have heard and read it over and over again that Betfair is an exchange and not fixed odds bookie where the odds are decided by punters themselves rather than being fixed and you expected odds to be much better. This leads to obvious question – why odds at Betfair are just slightly better than odds at any fixed odds bookie site such as William Hill?
The answer is very simple but before I reveal the answer let’s go back to square one and start it over again.
Ask yourself, what are odds? Odds reflect the possibility of occurrence of event. If an event is sure to happen (100% possibility) then, theoretically, odds for such an event will be 0. Practically it’s 1.01 at BF (this is the smallest odds possible at BF) or 1.00001 or similar ridiculous number at fixed odds bookie site.
On the other end of spectrum if an event is impossible to happen then odds for such an event will be infinite (theoretically). At BF odds for such event is 1000 (max possible odds at BF).
Sometimes bookies just close the book when event reaches either side of the possibility.
Once we have relearned the odds lets bring the question again.
Why are odds at BF not much better than those at fixed odds bookies?
Because you can’t set odds for an event to be ridiculously bigger or smaller than what they should really be. Odds are, more or less, reflection of the chances of an event occurring. So if whole world knows what the chances are for an event to occur then why would someone set odds much bigger or smaller than what their true value.
Let’s take a live example for tomorrow’s T20 match between SA v WI.
Paddy Power are offering 1.90 for SA and 1.83 for WI. Which is what everyone else would think after doing all data crunching, analysis and going through stats etc. I, personally, feel that WI should have been between 1.80 and 1.70 and SA should be above 2.00.
Holy cow! I didn’t see these odds at BF before I predicted my odds above.
So you see the odds are BF are true reflections of the possible outcome of a match which is the average of all odds being offered by traders. Fixed odds bookie offer slight less to get their cut on both sides of result.
If thousands of traders, including myself, think odds for WI should be around 1.80 (WI chances for winning this match is 55%) then why would odds be a lot more than this? Imagine someone offering 2.50 for WI. Everyone’s reaction would be that there is something fishy going out there as it’s not the true reflection of the expected match result. Such high odds are possible if someone gets some inside information that WI might lose the match in which case bookies will lure punters to back WI as such high odds will salivate any punter.
Another possibility is that bookies themselves might be involved in odds fixing.
Sometimes they also set an odds which is not quite practical.
Odds offered by UK bookies for England during FIFA world cup were quite lower than what they should have been. It’s no-brainer. Everyone in England backs English team and bookies know it hence they exploit this situation. They set odds to be much smaller to void potential loss should England wins by some miracle. England could go on winning few matches but at the end they are going to get kicked out handing hefty profit to bookies.
I hope I answered your question?