Why is Betfair Exchange Pricing So Accurate?

One of the most proven ways to profit from sports betting is by using value betting. Value betting uses the Betfair exchange as a way to highlight profitable bets with soft bookmakers. But it leaves many people wondering…

Why the Betfair Exchange pricing is so much more accurate then traditional bookmakers?

In today’s article, we will answer that question!

The Efficiency Of An Exchange

First off we have to note the difference between a betting exchange like Betfair and a soft bookmaker like Bet365. Betfair and all betting exchanges offer markets which allow peer-to-peer betting.

Users of betting exchanges can place back bets (traditional bets) and lay bets (accepting other people’s bets). This means that on a betting exchange, there is two-way action. Users are placing bets and other users are accepting these bets with both sides looking to get the best value.

The exchange makes money by charging a commission on winning bets.

On a betting exchange, you can also offer up odds, you don’t just have to accept what is currently available. This creates competition on both sides of the market, with people seeking value offering better odds to the other side of the market in order to get matched.

What generally happens on betting exchanges is the market reaches a point of agreement between the back odds and the lay odds. The majority of the time represents odds which are close to the true probabilities of every outcome.

This is known as the wisdom of the crowds.

Soft Bookmaker Model

In contrast, let’s take a look at how a soft bookmaker like Bet365 functions.

Note how the odds are much lower with soft bookmakers who generally offer poorer value than the exchanges.

Soft bookmakers don’t charge a commission, they are actively looking to profit from their customers. They do this by offering a market with a bigger over round which leaves them with a profitable margin. When done properly bookmakers create an arbitrage opportunity for themselves, profiting no matter the outcome.

Let’s compare the odds of Bet365 to Betfair.

  • Marseille 2.89 (34.6% probability)
  • Draw 3.84 (26% probability)
  • Brighton 2.37 (42.9%)

If we combine the probability of these outcomes we get a total of 103.5%. This is on their enhanced odds market.

This gives Bet365 a 3.5% margin of profit across all outcomes. If all the odds were fair then the total probability would be 100%.

Looking at the odds offered by Betfair we can see a big difference.

  • Marseille 2.9 (34.5% probability)
  • Draw 3.95 (25.3% probability)
  • Brighton 2.46 (40.7%)

The total probability of the 3 back prices on Betfair totalled 100.5%

Sharp Bookmakers And Arbitrage

Another reason that Betfair and other exchanges are generally efficient with their pricing is due to sports betting arbitrage.

When it comes to bookmakers there are two types soft (Bet365/Will Hill etc) and sharp bookmakers (Pinnacle/BetISN.)

Sharp bookmakers allow winning bettors to bet with them whilst soft bookmakers do not. They usually offer tighter margins in comparison to soft bookmakers and attract some of the biggest betting syndicates in the world to bet with them. Betfair prices are usually heavily correlated to these sharper Asian bookmakers which attract some of the best sports bettors in the world.

Any arbitrage/value bet situation that is available between a betting exchange and a sharp bookmaker is quickly taken advantage of. This in turn sees Betfair’s odds quickly follow the sharpest bookmakers in the world, who move their odds based on some of the sharpest betting minds in the world.

How To Profit From Betfair’s Accurate Pricing

Once you understand why Betfair’s pricing is very accurate you can use this to your advantage. There are times when soft bookmakers online and in the shop will have better odds than those available with the betting exchanges.

Betting these selections is known as value betting and is a very profitable method to use to make money.

A simple way to do this is to use software such as Oddsmonkey which compares the odds of bookmakers and betting exchanges. When a bookmaker is offering a price that is higher than an exchange’s lay price, Oddsmonkey highlights this with a rating.

Can You Profit From Betting Exchanges

It is important to note that whilst the odds on the betting exchanges are usually accurate by the time an event starts there are fluctuations in odds leading to an event. In-play markets also offer opportunities based on the dynamic nature of sports.

Which do offer profitable opportunities for those that spend the time learning the markets.

If you want more information on how to profit from Betfair, click here for 3 simple horse racing trading strategies that win on Betfair.

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