In 2000, Betfair came into being, and claimed the initiative in the exchange betting market. With a 90% share of this expanding market, Betfair has revolutionised sports betting in the UK. Its 100,000 users and £1.5 billion turnover mean that anyone interested in exchange betting should look to Betfair.
Exchange betting is a new concept that has taken the gambling world by storm. Instead of laying odds, Betfair simply provides an exchange in which bettors lay odds for each other. The gambler can therefore either ‘lay’ a bet of up to £5,000 at any odds he chooses, or ‘back’ some or all of a bet that has already been laid.
There are two upshots of this. Firstly, the odds are laid by punters and not by a bookmaker; secondly, Betfair can afford to take 5% commission, compared to the double-figure commission of most UK bookmakers. The result of this is that punter matching the bets is offered much better value for money at Betfair than at a traditional bookmaker.
For example, during semi-final week of the Rugby World Cup, Betfair's odds for the winner were compared with those of Ladbroke’s, a leading UK-based traditional bookmaker. A £10 bet on New Zealand would have yielded a £22 win at both Betfair and Ladbrokes; backing England would have won £35.50 on Betfair and £30 on Ladbrokes; backing France would have won £58 on Betfair and £50 on Ladbrokes; backing Australia would have won £98 on Betfair and £60 on Ladbrokes.
Across the board, it is fair to say that Betfair claim to offer odds that are 20% better than traditional bookmakers is probably not far from the truth.
The downside of Betfair is that the choice is much more limited. The odds for the Gillingham v Wimbledon division 1 soccer match illustrate this point. Ladbroke’s had bets open for all scorelines, but at Betfair punters had only laid four bets, and the only scorelines you could bet on were draws. At Betfair you are reliant on other punters, either laying a bet for you to back, or backing the bets that you have laid. This is both the advantage, and disadvantage, of the system.
The type of bets available are also more limited than on many sites, so there are, for example, no complicated accumulators. You can place three kinds of bets: Odds betting is a straight bet with odds; a line bet is an even odds bet on a particular event happening; a range bet is a prediction of a score, and you win or lose money depending on how close your prediction is.
Betfair is a UK-run site, and currently does not accept US credit cards due to question marks over the legal position of exchange betting in the US. But it is fair to say that punters will find ways around this. Traditional UK bookmakers, fearing the potential of Betfair, have been demanding tighter regulation and taxation. This is not a reason to assume that Betfair's future is endangered. A more sensible conclusion to draw is that, in the face of the exchange betting market, traditional bookmaking is under threat.
Despite being UK-based, Betfair offers a huge variety of sports, including some as obscure as bandy, hurling, darts and trotting, as well as all the major British and American sports.
Signing up is a simple and intuitive process, and deposits can be made by credit card, bank transfer, Western Union, cheque and various other methods. Your liability can never exceed the funds in your account, which for new users can be anything from £10 to £5,000. Withdrawals are equally straightforward, and can take place by cheque, credit card or electronic bank transfer.
Although Betfair's technology seems fast and reliable, the site itself has an unusual interface, some small fonts and some fiddly menus, although the user will soon get the hang of them.
Also questionable is Betfair's customer service. The phone line is answered immediately by knowledgeable representatives, but is not free and is only open from 8am to 10pm UK time. More worryingly, Betfair's email help desk ignored me completely.
But these are relatively minor gripes considering the excellent value for money that can be found on Betfair by a gambler who is willing to sacrifice some elements of choice and ease of use.