Betfair Exchange - actual odds after commission

[Lamontagne]

Hi all

First time poster, and at the risk of coming off as a math numbnuts, I'll lead off with this question:

I realize, we'd never take this bet, but for the sake of argument let's say we're betting a spot on the Betfair Exchange, where we know that the only two outcomes are both exactly 50%, at odds 2.00 with a commission rate of 5%.

If we win, we get back 1.95 for every unit placed, making the odds in the specific case 1.95. However, a bet never stands alone, and if we make it two bets (or any bigger number, you'd like) to even out the variance, you get 0.975 units for every unit placed.

Thus, my question is when comparing odds to regular bookies, do actually get an odds of 1.95 or 1.975?

My logic, without math being my strong suit, is saying 1.975, but every calculator I can find online says 1.95 and I cannot seem to Google anything else being mentioned anywhere. So am I correct or missing something?

[Alfa1234]

I don't really understand what you mean with the 2 bets part, but calculating the correct odds is simple.

You deduct the odd you see on Betfair by 1, then subtract the percentage of your commission rate off that number, and then add the 1 again.

So for an odd of 2 at Betfair, you first subtract 1, which gives you "1". You then deduct your commission off of that, so 1 - 5% makes is 0.95. You then add 1 to that number again. So your odd would be 1.95 in this case.

If you bet multiple units at different odds, you need to calculate the weighed average of your odd. Here is a simple calculator to do that:

http://www.rapidtables.com/calc/math/weighted-average-calculator.htm

Betfair also does this automatically for your if you click the "average odd" button just below your bet stake.

[Lamontagne]

I don't really understand what you mean with the 2 bets part, but calculating the correct odds is simple.

You deduct the odd you see on Betfair by 1, then subtract the percentage of your commission rate off that number, and then add the 1 again.

So for an odd of 2 at Betfair, you first subtract 1, which gives you "1". You then deduct your commission off of that, so 1 - 5% makes is 0.95. You then add 1 to that number again. So your odd would be 1.95 in this case.

If you bet multiple units at different odds, you need to calculate the weighed average of your odd. Here is a simple calculator to do that:

http://www.rapidtables.com/calc/math/weighted-average-calculator.htm

Betfair also does this automatically for your if you click the "average odd" button just below your bet stake.

Thank for the reply.

I'm fully aware of how to calculate the commission and odds for one, specific winning bet. However, not all bets are winners, unfortunately, and what I'm looking to figure out for certain is how the fact, that you do not pay commission on losing bets, factors into the "true" commission and thus odds.

Allow me to explain the "2 bets part" with a bigger number instead. Again, assuming the true chance of both outcomes are exactly 50%, if we place 100 bets of 1 unit, all things being equal 50 of those will win and 50 will be a lose. The 50 winners will return 1.95 units each and the 50 losers, obviously, zero for a total return of 97.5 units.

Thus, my logic says that over time the "true" odds will be 1.975 and the "true" commission will be 2.5%. Again, I might be missing something?

[Alfa1234]

If you lose half your bet, the odds for that bet would actually return "0" and if you bet 100 units total, you'd have 50x0 + 50x1.95 = 97.5. so the total odds would have been 0.975, NOT 1.975. By your logic, the commission would be 52.5% in that case...is that what you were missing?

[rodneytrotter]

Every single bet you place at 2 is net 1.95, there's no escaping that, nor will it ever get any higher.


The amount of actual commission you pay will vary depending on winners and losers, say you won 1 and lost 99 units, commission paid would only be .05 units on 100 bet, so 'effective' commission on your bets is .05%, but it doesn't help.