Blogs merged

I have now merged all my blogs.

Any further updates can be found at

http://talesfromthecantina.blogspot.com

£100, 100 bets. Profit = ……………

If you have been read other posts in the blog you will know that I am trying to get a better return on £100 by placing bets on sports, that I would by putting it in a savings account.

As you will know, each bet I place is for just £1 so as not to put too much risk on my original £100 capital, so early on I stated that to make it a fair test, I would place at least 100 bets so that the whole £100 had been invested.  It would have been easy to place a few bets and once I had beaten the return on a savings account stop and claim my experiment to be a success, but it wouldn’t have been fair.

Well this week I reached the magic 100 bets, placed and settled. So how have I done.

After 100 bets, my betting bank balance stands at £106.21.

At the time I started the experiment, the best savings rate I could have got was 3.61% AER, that was about 3 months ago. So in a year my £100 would turn in to £103.61, while in the three months since I started, it would be worth about £100.90.

So in three months I have a £6.21 profit compared to £0.90 from leaving the money in the bank, or to put it another way, almost 7 times the return compared to the best savings bank account.  Not a bad start.

Why betting exchanges offer better odds

I’ll not go in to too much detail here, but we need to look at things from the bookmakers point of view first.  Bookmakers make their profit by taking more in bets than they pay out.

A perfect market would have a value of 100%, that means that the value of bets place would equal that of bets paid out.  Not much good for a bookmaker as they wouldn’t make any money.  So a bookmaker will make a book with a value greater than 100% so they take more than they pay out.  Typically a bookmakers book will be 110% – 125%, i.e. they payout £100 for every £110-£125 taken in bets, so make a profit.  If a book had a value of less than 100%, it would be possible to back every selection to guarantee a win regardless of the outcome.

With a betting exchange, we are betting against other people.  The betting exchange matches peoples bets and eliminates the bookmaker so comes closer to forming a perfect market.  Obviously, the betting exchange does need to make money still, so will take a commission from your winnings, typically 5%.  Note this is on your winnings only, so if you back a selection at 1.20, your return will actually be 1.19 after commission.  If you lose, you don’t pay commission.

Being the bookmaker

Ok, so the title is a little inaccurate, but for most people laying the bet is similar to acting as the bookmaker, though as we are not actually making a book we aren’t technically being a bookmaker.

Anyway, last time I said that just laying the no hopers wasn’t perhaps the best quick and easy option to making money it may seem at first.  To try and explain this I shall make up a fictitious book with 6 selections.

Team	Odds
New York Rangers	1.10
Toronto Maple Leafs	1.25
Sheffield Steelers	15
Guildford Flames	50
Fife Flyers	100
Nottingham Panthers	250

Anyone familiar with ice hockey will recognise the teams above and know that either New York or Toronto would easily win this league, but which of those two it will be is a little less certain, so we decided to lay the other four teams knowing they have no chance (if you don’t know anything about ice hockey trust me on this).

On the betting exchange some people are taking a wild punt and they are wanting to back Sheffield, Guildford, Fife and Nottingham. This is important, on betting exchanges bets must be matched, so if you want to lay a bet for a certain amount at certain odds, there must be someone (or people) wanting to back the bet at the same amount and odds.  If you tried laying Nottingham at 2.5, it wouldn’t get matched while people can get odds of 250.  Think about it, would you back a team at 2.5 if you could get 100 times that!

So we lay £1 on Sheffield, Guildford, Fife and Nottingham. So if Sheffield win we lose £15, Guildford £50, Fife, £100 and Nottingham £250.  As only one team can win we don’t need to cover all these liabilities combined, just the biggest one.  So for this we need to have £250 in our betting bank and the most we can win is £4.  That £250 is then tied up until the league is over.

So you can see the problem, to lay things like this requires a much larger betting bank that I am using for this experiment.  However, if you are using a much larger bank, it is worth thinking about this as an additional option to help increase your returns.  With this example it is about the same as backing at odds of 1.02, pretty common for what I have been doing in this experiment.  So if you have a bit more to play with, you can make steady if unspectacular long term returns with very little risk.

Hopefully this gives you a bit of an insight in to betting exchanges. I plan on coming back to them at a later stage, as they present some very good opportunities for making money, which don’t form part of this experiment, but could be used in another experiment at a later date.

When is a bookmaker not a bookmaker?

If you have been following the blog, you will know that for the recently I have been using oddschecker.com to see if the odds I am getting are the best available.  What I noticed is that certain bookmakers were consistently offering the best odds for many of my bets, one being Betfair.

Unlike most of the others, Betfair (and others such as Betdaq) are not traditional bookmakers, they are betting exchanges.  So what is the difference.

First, there are two terms to be familiar with, back and lay.  If you back something you are betting on that out come taking place. For example if you back Manchester Utd to win a football match you win the bet if they win.  If they lose or there is a draw you lose the bet.  If you lay Manchester Utd to win, you are betting against a Manchester Utd win.  So if they do win you lose, but if there is a draw or they lost you win the bet.

With a traditional bookmakers, you and me always back a selection and the bookmaker always lays the selection.  With a betting exchange you are betting with other people not a bookmaker and can choose to either back or lay a selection. 

Brilliant, so you can now lay everything that doesn’t have a chance of winning and make easy money, if only it was that easy.  I’ll explain why it probably isn’t the easy winnings it may appear on first inspection another time.