1) Record Your Bets

Bettors should keep a record of every bet they have. This enables the bettor to constantly monitor how much they are winning/losing over a certain amount of time. It may also help to pinpoint certain types of bets or a certain sport which is particularly profitable or costly and maybe decide to adjust the stakes accordingly. Once you know the sports and markets that you make a profit on then can should focus on those primarily.

2) Do Your Homework

Bettors should try to arm themselves with as much information as they can before placing a bet. Where possible they should try to get the updated team news at the time of the bet to see if the team news impacts on what price the selection should be. Bookmakers will be sure to be doing their research on these factors so in order to give yourself a chance to compete on a level playing field you must get as much information as possible.

3) Price the market before looking at the prices

Ideally the bettor should try to compute the prices on a market before he looks at the bookmaker’s odds on the market. He should try to compute the odds to the 100% line. The bettor should then compare his odds against the prices being offered by the bookmakers to see if he believes there to be any value available in the market. If the bookmaker is offering a price which is bigger than the bettor’s 100% line after the research has been done then this can be perceived to be a value bet with a positive expected return. Punters should refrain from betting at a price that does not represent a value bet based on the customer 100% line prices.

4) Always get the Best Available Price

Bettors should endeavour to get the best price available on their selection before backing it. There are various betting odds comparison sites where it’s easy to identify which company are offering the best price. This may involve opening accounts with a number of bookmakers to place your bets rather than just one specific bookmaker. It is free to open these accounts and in fact many offer incentives to join up so it is worthwhile opening a number of accounts if needed.

An important point to remember on placing bets with betting exchanges is that they will deduct a certain amount off your winnings if successful. So although the betting exchange is appearing as the best available price the bettor should calculate the return after the deduction to check if the price is still more generous than the fixed odds firms.

5) Keep an eye out for Special Offers

In searching for the best price on a selection you should make yourself familiar with any of the companies that may be offering cashback specials that may refund your stake if it loses.

Check out Genie’s cashback specials section for a quick look at all available cashback specials. We rate the cashback so that you know which offers the best value.

6) Compare the Each-Way terms

If planning to place an each way bet have a look at the terms being offered by the various companies as the more attractive the place terms gives you a better chance of success and will represent the value bet. For example some companies may pay out on the first 4 places in the Grand National while others will pay out on the first 5 finishers giving you an extra chance of success.

7) Watch out for Bookmaker Oversights

Bookmakers can at certain times offer different prices for the same selection. An example of this would be offering 5/6 on a team to win a football match while offering a better price of 10/11 on the same team -0.5 on the Asian Handicap which is exactly the same thing. So when thinking of placing a match bet or handicap bet on soccer it is worthwhile comparing the Asian handicap prices also to see if there is an extra incentive to be had which would represent value betting.

Cue the invention of the internet which turned bookmakers into international businesses. Still though the only way to bet though was for the bookmaker to offer odds on an outcome and the punter is free to say ‘yes’ or ‘no’.

That is of course until Betting Exchanges were born. In June, 2000 Andrew Black and Edward Wray launched Betfair, the world’s first betting exchange, and revolutionized the face of gambling forever.

A betting exchange differs from a traditional fixed-odds bookmaker in that it allows punters to bet at odds set and requested by other punters. Members can make both ‘Back’ bets (normal bets on a selection to win) and ‘Lay’ bets (bets on the opposite side of the Back, against the selection), thereby eliminating the traditional bookmaker.

Punters can request a price and post it on the website. If someone else is willing to offer you that price they will do so and your bet will be matched. If no-one is willing to offer you the price then your bet will be unmatched and the funds reaccredited to your account balance (no charge).

To understand it simply think of 2 mates (Paddy and John) down at the pub, having a pint and watching the game. Paddy is telling John that Barcelona have the best attack he has ever seen and are a cert to beat Real Madrid. John disagrees and thinks that their dodgy defence is going to cost them. John says to Paddy ‘I’ll give you 2/1 on Barca to win this game’ to which Paddy replies ‘you’re on’ That’s a betting exchange.

Betfair works just like that except that instead of just Paddy and John, there are millions more punters just like them offering odds. Their identities are never known to one another.

In essence Betfair connects punters and allows them to become the bookmaker. It is essentially a no-risk bet networking site which makes guaranteed earnings by charging commissions on winning bets.

Betfair is the daddy of all of the betting exchanges. In order for a betting exchange to be successful it needs liquidity; i.e. it needs lots of Paddy’s and John’s offering their prices so that punters are able to have a decent sized wager at competitive odds.

Betfair makes it’s money by charging commission on winning bets. The commission starts at 5% of winnings on a market and can be reduced to as low as 2% for high rollers. The level of commission that an individual pays can be reduced based on a loyalty points scheme.

Betfair turns over more money in bets than any other betting organisation in the world. It is not the only betting exchange however. Other betting exchanges include Betdaq and WBX (World Betting Exchange), both of which operate in much the same way as Betfair.

The birth of the betting exchange is the most important occurrence in the history of sports betting. It made the fixed odds bookmakers review how they operated and ensured that they reduced their margins (improved their odds) in order to be competitive with the betting exchanges. Almost overnight the position of the punter was greatly improved.

Spread betting is a different type of betting tool to the traditional fixed odds bookmakers or the betting exchanges. The spread betting bookmakers set their quote on where they believe a selection will finish up (e.g. Man Utd Premier League season points: 82-84). Depending on your opinion on this market you can either “Sell” at the low end of the quote, 82, or “Buy” at the high end of the quote, 84. By “Selling” at 82 you will lose x times your unit stake for every point that Man Utd finish above the 82 or you will win x times your stake for every point that Man Utd finish below the 82 points. “Buying” at 84 works the opposite way as you will win x times your unit stake for every point that Man Utd finish above the 84 or you will lose x times your stake for every point that Man Utd finish below the 84 points.

No Limits?

Basically spread betting works on the premise that the more the customer is right the more he/she will win but on the flip side the more the customer is wrong the more he/she will lose. Depending on the type of market this can result in profits and losses escalating very quickly. The customer must always be aware that it is possible to lose more than their original stake. The customer must familiarise themselves with the worst case scenario result to calculate their maximum possible losses before they have a bet to ensure that they aren’t putting themselves in a position to possibly lose an amount they cannot afford to lose. To calculate this properly you must familiarise yourself with the “Stop Loss Rules” of each spread betting company which sets a maximum profit/loss on each market.

Types of Spread Bets

Spread Betting offers many different types of bets. “Win Index” is like match betting where they award a certain amount of points for winning, drawing or losing. Supremacy betting gives higher profits and losses depending on how much your selection win or lose by. Spreads companies offer many totals markets including total corners, bookings and goals in soccer, total games or points in tennis, total runs in cricket or total points in GAA and rugby. These markets tend to be more volatile than the traditional match betting markets so caution is advised before proceeding to have your bet. Spread betting can offer an alternative to trading on the stock exchange by offering certain financial quotes.

Binary Betting

Another alternative type of Spread Betting is Binary Betting. This offers a quote between 0 and 100 based on the percentage chance of the event occurring. These markets are settled at 100 if the event occurs or settled at 0 if the event doesn’t occur. Again it is important to be aware of your total winnings or losses before placing your stake.

Like any business a bookmaker needs to control their risk. Doing this as a bookmaker can be a bit more complex than for most businesses because there are thousands to people like you trying to take their money off them.

In order to manage risk they use risk control systems, namely a combination of ARC, Customer Risk Categorisation and Stake Factor.

Automatic Risk Control – A.R.C.

Automatic risk control refers to the computer system that all good fixed odds bookmakers use to control the liability that they open themselves up to on any given event. It is an essential piece of kit for any online bookmaker as it avoids the risk of getting completely taken to the cleaners if they offer an incorrect price or if someone knows something that they don’t.

Key Terms:
Max Book Loss (MBL)
The maximum amount that the bookmaker is willing to potentially lose on an event. It represents the level of liability that they are open to on any one selection in a market.

Max Singles Takeout (MST)
The amount of money that the bookmaker will allow any 1 person to win on a selection in a market. The MST applies to single bets only.

Max Multiples Takeout (MMT)
The amount of money that the bookmaker will allow any 1 person to win with a multiple bet that includes a selection in this market.

The level of liability is normally dictated first and foremost by trading policy of a bookmaker. A larger bookmaker is generally willing to open itself up to a greater degree of liability than a small bookmaker. This may be because they have been around a bit longer and have good alerting tools and more confidence in their traders or because they have a better customer risk categorisation policy in place.

The other key factor in the level of risk that a bookmaker is willing to take is the type of event in question. For example a bookmaker may be willing to set a MBL of £250,000 for a Premier League football game with a MST of £50,000 whereas on a Blue Square Premier League match they may set the MBL at £10,000 and the MST at £1,000. The reason behind it is pretty straightforward – all of the info that a bookie has at his disposal is the same as what you have access to. A football trader would find it difficult to keep up with team news from a lower league team but he may be all to aware that the goalkeeper might be your cousin and he told you that half the team contracted swine flu. They would also be wary of allowing a liability on lower paid levels of the game where the temptation for the players to cheat for £50k may be quite a bit higher.

Golf is an excellent example of how the bookmakers use ARC to manage their risk. Firstly they will set a MBL at the overall book level. This applies to all selections initially but on any 1 selection they may allow a higher or lower liability.

Here is a table that may help you to better understand.

The market is assigned the following default overview limits:

MBL of £100,000
MST of £15,000
MMT of £50,000

Any of the fields in the above table that remain blank are set to the overview limits. This means that the bookmaker is willing to take a liability of up to £100k on Tiger Woods, Mickelson, Singh, Els, Westwood and Cabrera.

They may have a lot of patriotic Irish punters so they decide to take a bit more risk on Harrington because they know lots of people will bet on him. However to continue to allow a lot of people to bet they have decided to reduce the MST to £5k and the MMT to £20k.

The trader reckons that Sergio Garcia is not going to play well this week so he is willing to take a bit more money on Garcia. For example other bookies may be offering a lower price of say 12/1 but this trader thinks that Sergio will have a bad week so he offers higher odds than any other bookmaker on Garcia to attract more bets. In order to accommodate the expected extra bets he has to open up the potential liability to £250k.

Similarly he fancies that Kenny Perry has a good chance of winning this week. He still wants to have a balanced book and offer a competitive price but he may adjust the amount that he is willing to lose on Kenny (MBL to £50k, MST to £5k and MMT to £20k).

Because Tom Watson is such high odds the bookmaker feels the need to raise the liability in order to accept a reasonable sized bet from the customer.

The bookmaker will continue to adjust the limits during the lifetime of the market. They will always be aware of their liabilities and may adjust a MBL on one player if they see that the potential loss is getting close to the current MBL. This is so that they can continue to take bets.

If the max book loss is reached then any further attempted bets on that selection will be rejected.

Customer Risk Categorisation

Not every customer that signs up to a bookmaker has their betting patterns scrutinised but when you start betting at a certain level or if you start to win off the bookmaker they will analyse your play and put you into a certain category of punter. The categories vary across different bookmakers but they generally cover the same ‘group’, namely;

New – By default a new sign up will be identified as a new customer.

Monitored – When a customer has made a few bob but the bookie is trying to work out whether you were just lucky or whether you really know what you’re doing.

Good – A customer who is doing better than the average punter. This customer will continue to be monitored and any bets of a certain size may be referred to a trader before being accepted.

Hot – A customer that is beating the bookmaker. The bookmaker can use a number of tools at their disposal to restrict how much you can bet.

Arber – A customer who is continuously betting on prices that are better than those available on other bookmakers or betting exchange will stand out as a probable arber. Once you are identified as an arber the amount that you are able to bet will be very low (maybe even zero). Bookmakers cannot beat arbers in the long term so naturally they will cut them off as soon as they can.

VIP – A customer who bets a lot and is not very good at gambling (i.e. lose a lot of money) will be identified as a VIP. The VIP will generally be allowed to bet more than the average punter by adjusting their stake factor upwards.

Stake Factor

The MBL, MST and MMT are all important but some customers are allowed to win more than others and some punters are restricted to only being able to win small amounts. How the bookmakers do this for an individual customer is through their stake factor.

The stake factor is the multiple of the regular maximum bet that an individual punter is allowed to have.

By default a new customer is given a stake factor of 1. This means that they can continue to bet at the same level as 90% of all customers. If the MST on a selection in a market is £10k then the most that you can win on a win single bet is £10k.

If you are a punter who bets high stakes and loses quite a bit of money then there is a fair chance that your stake factor will be increased. So for example if your stake factor is raised to 3 and the MST on the market is £10k then the most that you can win on a win single bet is £30k (3*£10k).

If you are a punter who likes to bet high but beats the bookie then they might reduce your stake factor. For example if your stake factor is reduced to 0.1 and the MST is £10k then the maximum that you will be allowed to win on any win single bet is £1k.

That is a high level overview. The modern bookmaking systems are very sophisticated and allow the bookmaker to reduce stake factor for certain sports and not others or allow you to bet on certain betting markets but not others.

Other Risk Control Mechanisms

Along with these main risk control strategies a modern online bookmaker will also employ the services of companies like Bet Radar. Bet Radar track all of the bookmakers prices and will alert them to any time that their odds are out of line with those available on Betfair. Once the trading team has been alerted they can choose to adjust their odds or to keep their price at the same level.

The type of alert generated depends on how far out of line you are with Betfair. If the price is 5 times of that available on Betfair for example the Bet Radar sytem will issue a high level alert to the bookmaker as it is quite obvious tha they have made a mistake in their pricing.

The terms and conditions of most bookmaker sites, as well as attempting to cure insomnia, are pretty comprehensive and allow them to cancel a bet that has been placed where an obvious pricing error has occurred. On the face of it this might seem like a scam but it is a very reasonable position as the traders entering the prices are only human and therefore error prone. Any adjustment or cancellation can be challenged by the punter (at no expense) with the regulatory body of the bookmaker (changes as per the jurisdiction of the company).

Bookmakers are profit making businesses. To keep them profitable they need to write in a certain amount of margin into each market they offer prices on. An overround of 110% means that the customer must stake a total of €110 spread out over all the selections to guarantee himself a return of €100 regardless of the result. In this way the bookmaker expects to make a profit of €10 for every €110 turnover.

We will first look at how margin is calculated:
For odds displaying in the fractional form X/Y the margin on this is calculated using the formula Y/(X+Y). e.g. the margin on 6/4 = 4/(6+4) = 4/10 = 40%.

For odds displaying in the decimal format this calculation is even easier as you just divide 1 by the decimal and display as a percentage. e.g. the margin on 2.5 (this is the decimal form of 6/4) is 1/(2.5) = 40%.

So if a bookmaker offers odds on a 3-way market with odds on the 3 selections of 1/1 (=50%), 2/1 (=33.33%) and 3/1 (=25%). This results in an overround of 108.33%.

The size of the overround depends on the number of selections and how high profile the event is. These can range from approximately 104% for the Superbowl match betting, 106% for Premier League Soccer match betting, 111% on lower profile soccer leagues, 125% on greyhound races with 6 selections, 130% on soccer correct score market to in the region of 160% on a golf tournament with over 100 golfers. The higher the overround the more margin the bookmakers expect to make from a market, making it increasingly difficult for the bettor to have a profitable bet.

Please see Genie’s chart that converts prices from fractional to decimal odds and displaying the margins on these odds.

It is an important point to note that bookmakers tend to make less margin from bets that are odds-on (less than 1/1) compared to prices that are odds against (bigger than 1/1). This is best illustrated using an example:

The true 100% lines odds on an event happening are 1/3 (=75%) so the bookmaker offers a price of 1/4 on this. Should a customer back this selection 100 different times with a stake of €1 on each then he will expect to win 75 times out of the 100 with a return of €1.25 on each winning bet giving an expected return of €93.75. This results in an expected profit for the bookmaker of €6.25 from a stake of €100.

Similarly the true 100% lines odds on an event happening are 4/1 (=20%) so the bookmaker offers a price of 3/1 on this. Should a customer back this selection 100 different times with a stake of €1 on each then he will expect to win 20 times out of the 100 with a return of €4 on each winning bet giving an expected total return of €80. This results in an expected profit for the bookmaker of €20 from a stake of €100.

Conclusion

This indicates that there is more margin built into the odds against prices in general making it increasingly difficult to make it profitable at these prices.