Why punters lose heavily on Betfair

[jd_fortune]

This is a little complicated to describe but may save you a lot of money on Betfair. Suppose you were to back a bet in BF at decimal odds of 21 for a stake of 1 unit because you think the true odds are 20 and expect to make a 1 unit profit. It's a 1 in 20 shot so 19 times you would lose your 1 unit stake and then you would win 20 units when it finally hit, which you think means a 1 unit profit for you. Since you have to pay commission on the 20 units of let's say 5% you are paying 1 unit in commissions. It's as if you paid 100% commission on your winnings, the 1 unit profit was completely wiped out. True that if the odds you got from BF were more than 1 unit over the true odds you would make some profit but even if you were getting such good odds that you would make 4 units when the cycle completes but you would still pay out 1 unit (or slightly more) in commission so you would have, in effect, paid 25% commission on your winnings. That's a lot worse than the edge on any game in any casino. You would actually be better off putting your money in a slot machine, 25% commission on winnings is outrageous. And how often are you going to get such great odds that there would be a 4 unit gain pre-commission even possible? Probably never. Lucky if you get 2, in which case you paid 50% commission on your winnings. It works the same way if you lay instead of back, the longer the odds the more commission you pay as a percentage of your winnings. In fact, you actually end up paying commissions ON TOP of your losses if you were wrong and the odds were actually off in the opposite direction, causing you a loss at the end of the cycle. You pay a little less commission on your losses than on your winnings but it's still extra losses. Suppose the true odds were 21 and BF gave you odds of 20 and you backed it because you thought the true odds were 19. 20 times you will lose 1 unit and then 1 time you would win 19 units. You would therefore lose 1 unit on the cycle BUT you had to pay commission on the 19 units you won when the cycle completed and the bet hit. You paid 5% of 19, which is 0.95 units so in reality you lost 1.95 units, almost twice as much. Would you be willing to bet on a coin toss if when you win you make 0.05 and when you lose you pay out 1.95 units? You'd go broke pretty fast that way. So how can you avoid this bottomless cash pit of BF commissions? You have to green up or red up all the time so that your wins and losses occur simultaneously rather than separately as happens when you just back or lay and let the bet run its course. This saves you all that extra commission payment because of the fortunate fact that BF only charges commissions on net winnings rather than raking the total pot like they do in poker. So you only pay commissions on your actual net winnings, not on the winnings that only made up for all the losses early in the cycle as would happen with straight betting. So just forget about "value bets". There is not much value after the commissions take most or all of it. Literally the only way you're not going to lose your shirt in BF is by getting people to take bad odds from you and then you getting better odds from someone else. There's no way you can withstand those compounded commissions on regular bets for any length of time. This explains why pretty much every punter on BF loses huge amounts of money over any significant length of time. The BF odds would have to be vastly off for it to be at all profitable. That's just not going to happen. The starting prices are always very close to true odds, minus a small overround. Nobody is dumb enough to offer vastly inaccurate odds on BF which would result in them losing money. There are, however, a bunch of punters out there who are naive enough to take the bad odds you offer them some time before the event starts or even in-play. That's where your profit comes from, people who actually think they can win long term by simply backing a horse or a team and then sitting there and seeing what happens. They are sadly mistaken.

[MPLouis]

Re: Why punters lose heavily on Betfair I find Betfair odds are sometimes better than bookies, even when taking Betfair commission into account. Betfair can also be useful for trading, but I find it's hard to resist over-trading (which often makes it unprofitable).