Matched Betting Introduction
What you’ll need:
- Time and willingness to sit down and learn
- A computer or laptop with an internet connection. Phones or tablets also work
- Some cash to get started. We would recommend a minimum of $200 in the beginning but the more money you use, the faster you can make more money
- To live in Australia and be over the age of 18
01 How betting works
If you bet on something you are basically saying you think a certain outcome will happen. However, there are always two sides to every bet, cause in order to place your bet you need to find someone else who thinks the opposite will happen.
’I bet that I can drink my beer in less than 15 seconds’
‘No way! I bet you can’t drink that in less than 15 seconds’
One person is betting on one outcome and the other person is betting on the opposite outcome. It wouldn’t be a bet if the two people didn’t think different outcomes would occur.
In matched betting these two conflicting sides are called backing and laying.
Backing is betting that something WILL happen – “I bet that I CAN drink my beer in less than 15 seconds”. Laying is betting something WILL NOT happen – “No way! I bet you CAN’T drink that in under 15 seconds”
Backing or placing a back bet- Predicting that something WILL happen
Laying or placing a lay bet- Predicting that something WILL NOT happen
These two terms are the core of matched betting.
02 Backing and Laying
When you place a bet with a bookmaker, you are betting something WILL happen and therefore every time you place a bet with a bookmaker you are backing an outcome.
But remember, for a bet to be formed there needs to be an opposite bet placed. This is how bookmakers work. They will match your back bet with the opposite bet at odds that they choose to offer. So the bookmakers place the lay bets.
You go onto the bookies’ website and bet $10 on Octagonal to win race 1 at Randwick this Saturday.
So you are backing Octagonal to win.
When you place this back bet, the bookmaker is essentially laying Octagonal to form a bet with you.
So the bookmaker is betting against you that Octagonal will not win the race. The bookie doesn’t physically place a lay bet, they just accept your money and agree to pay you out at the specified odds if Octagonal wins which is essentially what a lay bet is.
If Tough Larry wins, then you will win the bet and make some money. If Tough Larry does not win, then the bookmaker will keep the money you used to place your bet with.
All bookmakers do is lay peoples bets.
They take money off people and form a bet by matching the opposing view.
03 How odds work
Chances are you’ve already placed a bet before so you have an idea of how odds work, but for those of you that have not, then don’t worry we will guide you through them.
In the example above you made a back bet of $10 on Octagonal to win Randwick race 1 and the bookmaker layed your bet with the opposite viewpoint of Octagoal not to win which formed a bet.
However, the odds of Octagonal actually winning the race were 5.00. Meaning for every $1 you bet on Octagonal you will win back $5 if he does in fact win.
So you initially bet $10 at odds of 5.00 meaning that if he did win then you would be returned $50.
$10 X 5.00 = $50
Return is how much the bookmaker has to pay out if the backers bet wins and is made up of two things; the initial stake you place plus the winnings in relation to the odds. So you placed $10 at odds of 5.00, your return is made up of $10 that you initially staked and then the $40 winnings.
$50 = $10 + $40
These odds are calculated by the bookmakers for the probability that they think something is going to happen.
The bookies’ view:
If you now look at the Octagonal bet from the opposite viewpoint; that of the bookies, you will notice it is a little different this way round. The bookie is taking $10 off you initially, which will be the bookies return if Tough Larry doesn’t win. If Tough Larry does win, the bookies will have to pay out $50 to you. This $50 will be compiled of the initial $10 that you staked, and then $40 that the bookie has to pay out of their own pocket due to the odds. The bookie will, therefore, lose $40 and this is called the bookies’ liability.
($10 X 5.00) – $10 = $40
Liability is the amount the bookie is liable (responsible) to pay out if a bet you placed with them wins. Therefore the bookies’ liability of this bet is $40.
You could look at it this way:
When making a back bet a stake is placed and when a placing a lay bet a liability is placed.
05 The Betting Exchange
So you now know that there are two sides to every bet, a backer and a layer, with the bookies always acting as the layer. And you’re probably thinking, why do I need to know this?! Well, imagine if you could act as the bookie and lay bets…
Betting exchanges do just that.
Betfair exchange is the only exchange currently up and running in Australia. The exchange allows people to bet against each other, eliminating the need for a bookmaker to be involved in the bets. Betting exchanges are a little bit different than conventional bookies as you can place back bets and also lay bets.
They look a bit more completed but they are really quite simple.
So for example, if you don’t think Melbourne Storm will win the league this season, you can go to Betfair Exchange and place a lay bet on Melbourne Storm.
Your money will be matched with someone else who has backed Melbourne Storm to win the season and this forms a bet.
No bookie is involved and there is only a bet between you and another random person who has an opposite view to yourself. It’s kind of like making a bet with your friend, but only with a stranger that Betfair Exchange matches you up with.
But how does Betfair make money if they don’t directly get involved in any bets themselves? Betfair works off a commission basis. Every time you win a bet on Betfair a percentage commission is taken from your winnings.
This can range from 5%-10% depending on the state and racing code of the event you are betting on.