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Matched betting - technical help for our MumsBetters(14 Posts)
Welcome all MumsBetters.
This thread will explain some of the basic principles of betting and matched betting. It is a collaborative project emerging from more general discussion on other threads, as a means of keeping our "technical" knowledge in easy reach. Please keep this thread free for the technical stuff. If you want to watch this thread, use the “watch thread” function rather than posting to placemark. If any technical stuff emerges in the general discussion thread that would valuable to have here, we can C&P it across.
General chit chat and discussion of matched betting can be found here:
Matched betting discussion thread
Please take some time to read this thread before you use your hard earned cash for anything
Please also take advantage of the multiple tutorials on the Internet, particularly at OddsMonkey and Profit Accumulator, to ensure you have a thorough grasp of the principles and process before you start.
The various contributors will try to title each post in a way that makes it clear which audience/aspect is being addressed e.g. NEWBIE, RELOAD OFFERS etc.
The basic principles of a bet
A bet is composed of two parts: a back bet and a lay.
A back bet
Back bets are very simple to comprehend – most of us will have stuck £1 on England to win the World Cup (or similar) i.e. we have backed England to win. To make a back bet, we place a stake.
We are making back bets with a bookmaker (or someone acting as a bookmaker). The bookmaker accepts our proposed back bet at the stake we specify and offers to lay the potential payout, should we win our back bet. The payout the bookmaker will give us depends on the odds they offer us. A bookmaker promises to pay us stake X odds if England win the World Cup. We think of the bookmaker as liable to pay us should we win, and thus the money they set aside to cover our potential win is called their liability.
Terminology check: We have backed England to win the World Cup, and the bookmaker has layed England to win the World Cup.
Concept check: As the bookmaker is laying against a specific outcome – that England will win the World Cup – the bookmaker is effectively betting on any different result other than England winning the World Cup.
Thus, the two parties involved in a bet take different roles:
- as the backer putting forward a stake
- the person laying that back bet and setting aside liability.
A simple example
Anna wants to bet that a tossed coin will land on heads. Zara is happy to take Anna’s bet and offers odds of 2/1 that the coin will land on heads. Anna is the backer placing a back bet and Zara is laying the bet. Anna pays a stake to Zara, say £5. Zara has promised to pay Anna £10 (stake value X odds) should Anna’s back bet win – Zara is laying the back bet and sets aside her liability, £10, should she lose the lay.
The pot of cash available for either party to win
After Anna and Zara make this agreement but before the event is settled, the pot of cash associated with this bet is £15.
- £5 is Anna’s stake
- £10 is Zara’s liability.
If Anna wins her back bet, she retrieves her £5 stake and wins Zara’s £10 liability. If Anna loses her back bet, Zara retrieves her £10 liability and wins Anna’s £5 stake.
Concept check: Zara has not put forward a stake of any value. When you lay a bet, you do not place a stake, you cover someone else’s stake according to the odds you offered.
Settling a bet
Now toss the coin and check the result. Give the pot to Anna if it lands on heads, or to Zara if it lands on tails (or on its side, or any outcome other than landing on heads).
Job done, someone wins, someone loses. That’s a bet.
Matching a bet
(See previous post from Tue 18-Apr-17 13:56:33)
The basic bet
Anna has made a back bet of £5 that a tossed coin will land on heads. She made the bet with Zara, who has layed the bet at odds of 2/1. The pot of cash either stands to win is £15; £5 is Anna’s stake, £10 is Zara’s liability.
If Anna wins her back bet, she will retrieve her £5 stake and win Zara’s liability of £10, therefore a profit of £10. If Anna loses her back bet, she forfeits her £5 stake to Zara, who wins Anna’s stake and retrieves her liability. Zara will make £5 profit.
Balancing a loss
Anna realises before the coin toss that she will be £5 out of pocket if her back bet on heads loses. To balance this potential loss, she could identify a situation where, if the coin doesn’t land on heads, she will get £5. Anna has a close look at Zara’s setup - if the coin lands on anything other heads, Zara will win Anna’s stake of £5. So if Anna were to make her £5 back bet on heads and also lay someone else’s back bet on head at the same odds, she will break even over the whole transaction.
Anna’s lay and the lay exchange
Enter Mimi. Mimi wants to make a back bet of £5 at 2/1 that a tossed coin will land on heads. Anna wants to lay Mimi’s bet, because that will allow her to break even when matched with her back bet with Zara.
We need to pair Mimi, willing to make a back bet, with Anna, willing to lay the bet. This is what the lay exchange does – it pairs people making back bets with other people willing to lay those back bets. Anna goes to Betfair and tells the exchange – I want to lay against a £5 stake at odds of 2/1 on a coin toss landing on heads. Conceptually, Betfair unites Anna with Mimi, and allows the two to make the bet with each other, with Mimi placing a back bet and Anna laying that back bet. Mimi puts forwards a £5 stake and Anna sets aside her liability of £10 should she need to pay out against Mimi’s stake.
The lay exchange in practice
In actuality, Betfair works by collecting all the stakes of a particular back bet (an event happening at specific odds) and displaying them as a pot of available value. When you lay the event, you specify, from this pot, how much of that collective back bet stake you want to lay against, and therefore how much of that stake you will pay liability on if you lose the lay.
Anna’s matched bet and the pots of money available
Anna now has cash in two pots of money, both worth £15.
- Anna’s back bet with Zara that heads will win the coin toss – this pot contains Anna’s £5 stake and Zara’s £10 liability.
- Anna’s lay of Mimi’s back bet that heads will win the coin toss – this pot contains Mimi’s £5 stake and Anna’s £10 liability.
So toss the coin. If it lands on heads, Anna will win her back bet with Zara and gain £10, but forfeit her liability, which is also £10, to Mimi (net gain £0). If the coin lands on anything other than heads, Anna will forfeit her £5 stake to Zara but win Mimi’s £5 stake (net gain £0). Anna has a perfectly matched bet, which is a zero sum outcome – she will neither gain nor lose money.
How can Anna profit from this type of set up? We need to look at bets where the stake made on the back bet doesn't cost any real life money i.e. the free bet.
Matched betting with free bets
(See previous posts from Tue 18-Apr-17 13:56:33 and Tue 18-Apr-17 14:45:07)
Why make zero sum matched bets?
In our original scenario, Anna wanted to make a £5 back bet on heads winning a coin toss at odds of 2/1. Zara wanted a chance to win Anna’s £5 stake. To persuade Anna to make that back bet with her (as opposed to anyone else), Zara offered Anna a free £5 bet if Anna did so.
We know that Anna’s first matched bet – her back bet with Zara combined with laying Mimi’s back bet – gave Anna no profit. However, Anna has now earned a free bet with Zara, and it is here where Anna can turn her profit.
Anna’s free bet and the pot of cash
Anna has a voucher for a £5 free bet with Zara. Let’s say she wants to make the same bet as her original back bet – that a tossed coin will land on heads, and Zara is still offering odds of 2/1 on this. Going through the same rationale as in previous posts, we end up with a pot of cash between Anna and Zara that contains £10, instead of £15 in the original bet. This is because, in this case, Anna’s stake is notional – no actual £5 stake has been put forward by Anna. However, Zara still has to set aside her £10 liability to cover the payout, should Anna win her back bet.
Laying the free bet (incorrectly) and the pot of cash
Warning: the following is deliberately incorrect. When learning this process, I found it helpful to follow it through incorrectly, then work out the correct method of laying in this context
Anna lays the bet with Mimi, exactly as before. Their pot of cash contains £15 - £5 is Mimi’s stake, £10 is Anna’s liability.
An unequal outcome
Let’s toss that coin. If it lands on heads, Anna wins £10 from Zara but loses £10 to Mimi (net profit £0). If it lands on tails, Anna hasn’t lost anything to Zara (because her stake was free), but she’s won Mimi’s £5 stake (net profit £5).
The mantra of matched betting is: if your outcomes are not equal, it is not matched betting, it is gambling
Matched betting is not gambling and we always seek equal profit outcomes, whichever way a result goes.
So what went wrong with the above lay?
The principle of equal outcomes
In the above (incorrectly) matched bet, Anna can make a profit of either £0 or £5, depending on the outcome of the coin toss. Conceptually, to follow the principles of matched betting, Anna would like to equalise that profit over either outcome i.e. create a situation where she would win the same amount of money, whether the coin lands on heads or not.
To equalise her profit over either outcome, Anna must lay the bet in such a way that:
the payout she gains from her back bet with Zara - her liability paid to Mimi at the exchange (should she win the back bet) = the stake she wins from Mimi at the exchange (should she lose the back bet, win the lay and gain Mimi’s stake)
Laying the free bet (correctly) and the pot of cash
These numbers are sufficiently simple that it’s possible to see that Anna should lay against a stake of £3.33 which, at odds of 2/1, will forfeit a liability of £6.66, should she lose the lay.
If she wins the back bet, she gains £10 from Zara but loses £6.66 to Mimi (net profit £3.34). If she loses the back bet, she loses nothing to Zara (her stake was free) but gains £3.33 from Mimi (net profit £3.33).
The outcome of the event is now unimportant. Anna will gain £3.33 (ignoring the odd penny when rounded), whatever the result.
A perfect matched bet and Anna is in profit!
What are odds?
Odds values represent the amount of payout versus stake, should a back bet win. They are usually approximately linked to the probability that an event will happen (as judged by the bookmaker offering the bet). If an event is very unlikely, the odds will be long; a very possible/likely event will have short odds.
Thus, a bookmaker may offer very long odds that I will win the London marathon (10000/1) but far shorter odds on Paula Radcliffe doing the same (10/1).
Odds can change to reflect the market though. If loads of people decide to put money on me winning the London marathon, the bookmakers will assume they have miscalculated their probability of this event and adjust their odds accordingly. I don't suddenly become more likely to win the marathon, but the bookmakers are trying to minimise potential losses if I do.
Paying out to one person at 10000/1 is very different to paying out 1000 people at 10000/1.
When you make a back bet, the odds you made it at are fixed. Even if the market changes and odds are much shorter at some point, you are locked into the odds at which you made the bet.
Stake returned/not returned
A winning back bet made using real cash will be paid in two portions (although all grouped as one payment): your stake is returned and you win the multiple of the stake that matches the odds.
If you bet £1 on me winning the London marathon at odds of 10000/1, and I win it, you will receive £10001 from the bookmaker - your £1 stake return and your £10000 win.
Because free bets are made using notional stakes that have no real cash value, a winning back bet made with a free bet will often be tagged as 'stake not returned'. Should you win, you get the winnings, but the bookmaker is obviously not going to willingly give you the value of the stake on top.
Fractional and decimal odds
Fractional odds are those we normally see - 2/1, 10/1, 10000/1. To convert fractional odds to decimal odds, make the division calculation then add 1.
Thus, 2/1 fractional = 3 decimal, 15/2 fractional = 8.5 decimal, and so on.
For matched betting purposes, we will be working in decimal odds, because we want to very easily compare odds at the bookmaker and at the lay exchange. It's far easier to do that in decimals.
12/5 versus 5/2 takes some mental arithmetic to compare. 3.4 versus 3.5 is an immediate comparison.
All bookmaker and lay exchange websites/apps will have a setting to switch from fractional odds (the default) to decimal odds. Do this on every site you use.
Matched betting – back bet odds
This is the back bet you make with bookmaker and lay at the exchange, with the result that you neither win nor lose any significant amount of money, but qualify for a free bet with the bookmaker.
Qualifying loss and odds
If you take a single Event X, and compare back bet odds at a bookmaker and lay odds at an exchange, you will see that the lay odds are usually longer. Bookmakers deliberately pitch their back odds shorter than the available lay odds. This scenario – shorter back odds and longer lay odds - means that backing Event X at the bookmaker and laying Event X at the exchange will always create a loss of money overall. Longer back odds than the lay odds creates a situation where a matched back/lay would generate cash, and bookmakers don’t like punters doing that (hence they track their back odds to always be shorter than lay odds).
So our qualifying bet will usually lose money. We don't mind losing a tiny bit of money in our qualifying bet, because the profit we make from our free bet will more than cover the loss. But we want to minimise this loss - called a qualifying loss - as much as possible.
The best way to minimise your qualifying loss is to make back bets and covering lays at odds that are as closely matched as possible. This tends to happen at short odds, where there is less wiggle room for big gaps to appear. In addition, bookmakers will often specify a minimum odds value that you must bet on with your own money in order to qualify for the subsequent free bet.
Therefore, your qualifying bet will typically be made at odds of around 1.5-2.
This refers to the free value/voucher you use as a stake to make a second back bet with the bookmaker. When making a back bet with a free stake, we want to maximise our % profit of the free bet value.
Free bet odds
I'll write an explanation downthread, but for now, all we need to know is that the longer the free bet odds = the greater % of the free bet we make as profit.
Odds of 3 will return a max of 66% free bet value.
Odds of 4 will return a max of 75% free bet value.
Odds of 10 will return a max of 90% free bet value.
Remember: the longer the odds you make your free bet at, the greater the value of your liability in the exchange, the higher your balance needs to be at Betfair.
Be aware: Bookmakers are very quick to see that a punter is making bets at short odds when it’s their own real cash being staked and then placing free bets on stupidly long odds. Don’t be greedy.
Therefore, your free bet will typically be placed at odds of 4-7.
Overall betting pattern
A profit making matched bet comes in two parts:
First, the qualifying bet on Event X (and associated lay), where we expect to make a small loss overall
Second, the free bet on Event Y (and associated lay), where we expect to make a profit of 75% of the value of the free bet (or more).
Therefore, in total, to finish a standard bet/free bet offer, you will be making four bets. Depending on the time it takes for your free bet to be credited, it could take a few days to complete a round. If your free bet is credited instantly, you can turn the set over very quickly.
From theory to money
The above threads give an overview of the theory of betting, making matched bets, and turning free bets into actual cash via matched betting. There are lots of numbers to process: stakes, odds, liability etc.
DON’T PANIC! It’s important you understand how the numbers are generated, but you don’t actually have to calculate these numbers yourself!
BIG SIGH OF RELIEF
Go to the OddsMonkey website and register for their free trial. (There are tutorials there that you can use to refresh your new knowledge – take advantage of these videos). On the OddsMonkey website is a menu called Tools. Open up the Oddsmatcher software. This software scans bookmaker and exchange websites and identifies pairs of bets that are suitable for matched betting.
You will see a list of sporting events, with each entry showing the following details:
Time/date – when the event is happening.
Icon – indicates the sport involved.
Bet – the team/horse you will be backing.
Type – what you are backing that team/horse to do.
Rating – the % score given to the bet for the purposes of matched betting, where higher scores indicate back bets and associated lays that can be made at closer odds (anything over 100% is flagged in red, see downthread for why this happens).
Icon – the bookmaker offering the back odds.
Blue box – the back odds.
Icon – the exchange offering the lay odds.
Pink box – the lay odds.
Avail. – the value of the collective pot of back bets at the exchange, against which you can lay against (see downthread on partial matches/unmatched lays).
Ignore red flagged events for the moment and click on the blue “i” button next to the bookmaker icon on the first event with a rating less than 100%. The calculator will pop up in a new window.
The left hand panel summarises the event information and the event you will be backing and laying, with the odds.
The right panel has four options across the top – you should check the one most appropriate for the back bet you want to make. For newbies, this will be either the “Normal/qualifier” option or the “Free bet (SNR – stake not returned)” option.
We use this option when making our qualifying bet.
Fill in the stake of your back bet, click outside the box and the values in the blue and pink panels are direct instructions of what to do at the bookmaker and at the exchange, followed by a summary of your qualifying loss in red. Follow these instructions and you’ve made you’ve made your first qualifying bet.
Warning: Doublecheck at both the bookmaker and lay exchange that the odds haven’t changed in the time it’s taken you to navigate from the Oddsmatcher calculator, locate the market at both websites, and open your betting slip. If they have, go back to the calculator and refresh the search to see if that event is still rating well, or if there is now a better option for a matched bet.
Warning: Take note of the calculated liability. You will need at least this balance in the lay exchange to set aside to cover the stake, should you lose at the exchange. If the liability is too high, go back to the calculator and search for an event with lower odds; this will reduce your liability.
Free bet (SNR) option
Now let’s imagine that event is settled and you’re working with your free bet. In the Oddsmatcher calculator, keeping the bet stake the same (for instructional purposes), switch from “Normal/qualifier” to “Free bet (SNR)”. Look what happens to the lay stake and liability (they decrease) and look what happens to your profit figure – it goes green and tells you how much you’re going to earn with this free bet!
Again, follow the instructions at both bookmaker and exchange, taking care to doublecheck odds and that you have sufficient balance to cover liability.
Filtering events in Oddsmatcher
We used the Oddsmatcher calculator for both halves of a matched bet set – the qualifier and the free bet. However, we might want to place certain constraints on what events we wish to bet on, most obviously the odds of the event (short odds for qualifier, longer odds for free bet). Click on the Filter button and you can enter parameters as you wish. These will include: limiting the bookmaker (because your free bet has to be made with a specific bookmaker), picking the lay exchange you wish to lay at, and the minimum odds values for events.
Remember: qualifiers are made at odds of around 1.5-2. Free bets are made at odds of around 4-7.
You may also want to limit which sports markets you operate in. Randomly chucking bets (especially free ones) on unusual sports will flag to the bookmaker that you’re up to something. The best time to use unusual sports markets is when there is a major event on – the Superbowl, Wimbledon etc. Otherwise, you probably want to stick to footie and horses.
This is a repeated sticking point for people trying to get to grips with lay betting - the stake value.
You are LAYING the bet, you are not MAKING the bet. The person making the back bet (in the ether, behind the Betfair interface) is putting forward their stake. You are promising to lay the payout (according to the odds), should that person's back bet win.
THE STAKE VALUE YOU ENTER IN BETFAIR IS NOT YOUR MONEY
And again, in bold:
THE STAKE VALUE YOU ENTER IN BETFAIR IS NOT YOUR MONEY
All you are doing is telling Betfair that you are willing to lay on someone else's stake, to the value you enter. You are promising to pay out on that stake value.
To make sure you're good for that payout, Betfair removes the value of the liability form your balance. After all, we can't have you running off before you pay out against that stake
THE STAKE WHICH IS NOT YOUR MONEY.
NEWBIE WHO GETS IT
Red Flags on Oddsmatcher
(See previous post Wed 19-Apr-17 14:00:46)
The red flag appears
Usually, the odds at the lay exchange are longer than the odds at the bookie. This means we always expect to make a loss on our qualifying bet. Sometimes, the odds at the bookie are longer than the odds at the lay exchange. The Oddsmatcher calculator red flags such matched bets.
This situation reverses the usual qualifying loss and means that you will be able to make a profit from your first bet.
The profit margin is very low (because the odds are not usually far apart) but if you have a big wedge of money, you can create £££. Deliberately exploiting these quirks in the bookie/lay odds is called arbing (derived from arbitrage betting ). If you arb a lot, with big money, the bookies will zap you. Nonetheless, some people use only arbing to make their matched betting profits.
When do red flag events happen?
The red flags appear in highly mobile markets with constantly changing odds, where the bookies fail to adjust theirs quickly enough to stay shorter than the lay odds. Horse racing is the most obvious opportunity. And these red flagged matches don't stay favourable for long - bookies will see a flurry of bets on an event and know something is happening. The odds are often only favourable for a few minutes, if that.
As far as I can read, Oddsmatcher only returns 'reasonable arbs' - ones that aren't going to infuriate a bookie too much if they see they've mistakenly gone too long with their odds. We are talking about differences in odds of, say, 5 v 4.9, so, on a qualifying bet, you might make 30p or so instead of losing that 30p. Professional arbers look for greater differences, but risk the bookies pulling the bet because, they argue, it's obvious to the punter that there's an error they are trying to exploit.
Should I bet on red flagged events?
There is no reason not to take red flag matches on either qualifying or free bet. You'll make slightly more profit than normal. But you'll have to be quick to get your betting slips loaded.
Remember: It's always important to check odds haven't changed while you're navigating to websites and loading your betting slip. It's doubly important in this situation when odds change rapidly.
NEWBIE WHO GETS IT
Unmatched/partially matched bets at the lay exchange
Lay market value
Conceptually, we think of laying a bet at the exchange against a specific stake. Mimi has put forward £5 as a back bet stake, and we choose to lay against that stake.
In reality, Betfair works by collecting a pot of back bets from anyone that makes them. That pot is then offered out for other people to lay against portions of it. The total of this pot is the lay market value or lay market availability .
The value of the lay market at time of calculation/laying is indicated:
- At the far right of the Oddsmatcher calculator, the £value.
- In Betfair itself, the £value in the same box and just underneath the odds number.
A matched lay
When you specify a stake on Betfair, you are effectively saying:
'I want to lay against X amount of stake/back bet money. If I win the lay, I will claim X amount of money (the stake value). If I lose the lay, I will pay out liability on that X amount of money (stake value X odds).'
You type in the stake you want to lay against, place the lay, and your potential liability is removed from your balance. You will also get a statement that the lay has been successfully matched.
Unmatched/partial matches happen when you lay against a stake value, but there haven't been enough back bets laid and the total stake pot is not as high as the stake you specify.
Concept check: You can't lay against a back bet that hasn't been made. Imagine if a bookie decided to lay against nothing. Who would they pay the liability to?
If the lay remains unmatched/partially matched, you will not win the stake you wanted, only the max stake total that was bet. You will only pay liability on the max stake value put into the pot. Essentially, the lay is determined by a stake value that you have not chosen and is unlikely to represent the value you require to make your matched bet.
This is bad news, as the point of matched betting is to counterbalance the free back bet you've made elsewhere, and any variations to your lay bet compromise the mantra of equal profits for either outcome.
Avoiding unmatched/partial matches
Always check the £value at the far right of Oddsmatcher and again in Betfair before you place the lay. This tells you how much the back bet stake pot is worth. You can then easily see if there is enough there for you to lay your required amount against.
Remember: you are laying against other peoples' back bets. A big footie match will attract plenty of back bets so you're unlikely to be unmatched in the first place, or remain that way for long. A very odd event - over 6 goals in a women's lacrosse match in Cuba - is unlikely to attract many back bets so the amounts you can safely lay against are limited.
Use your heads. Don't make unmatched lays.
THANKYOU! I shall be digesting this tonight
When making a pair of bets, you should have apps/windows open for both bookie and exchange at the same time.
Run everything in parallel.
1. Locate event at both sites.
2. Locate result at both sites.
3. Double check with Oddsmatcher that the odds are still valid.
4. Open betslip at both sites.
5. Key in stake details at both sites.
6. Double check with Oddsmatcher that the stakes are correct.
7. Click to place/confirm your back bet
8. Click to place/confirm your lay bet
Back bet first, then lay bet
If something happens to websites, or odds change like lightning, or you lose connection, or whatever, it is easier to work out corrective measures with your lay bet.
Hence, lock in your back bet first.
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