£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.