I realise that a lot of people coming to this site may not be familiar with a lot of topics that I talk about. In this article I will discuss the most basic way of earning money from bookies so that novices can start their journey.
What is matched betting and why would I want to do it?
Matched betting specifically refers to claiming sports offers promoted by bookmakers (and sometimes exchanges) in order to obtain free bets. These free bets offer value to us because we can back a selection at the bookmaker with the free bet and then lay the bet off at an exchange and profit from the difference.
But what’s a bookmaker, exchange, back bet, and lay bet?
A bookmaker is simply a company that compiles odds and accepts bets from the public. The name comes from the way they operate their business. As you may know from probability the sum of all possible outcomes is equal to 100%. When bookmakers offer odds for a sporting event, they do so by offering odds such that the implied probability is greater than 100%, giving them an inherent edge. This is what is known as an overround book which means that if they are able to find people to bet on each event outcome they will be guaranteed a profit (also known as ‘balancing the book’).
Here’s an example. Let’s say I’m going to flip a coin and I’m offering decimal odds of 1.5 (i.e. if your selection wins you receive back 1.5 times the amount you bet) for both heads and tails. If I find two people with person A betting £1 on heads and person B betting £1 on tails then before the event has happened I am £2 up. After the event has happened:
Heads win: £1.50 paid to person A. £2-£1.50 = I’m 50p up
Tails win: £1.50 paid to person B. £2-£1.50 = I’m also 50p up
When you make a bet at a bookmaker you are directly betting against the company. This is in contrast to an exchange where you bet against other people. Exchanges are unique in that they are organised in the form of a market. People can bet for an event to happen or they can bet against an event happening. This is commonly referred to as backing and laying. Here’s what a typical exchange market looks like from the most popular betting exchange out there, Betfair:
Notice that the book is nearly exactly 100% for both sides of the market, in contrast to a bookmaker’s which typically have a book percentage of about 105%. Exchanges make their money by charging a small commision, usually on winning bets, instead of offering poor odds.
I mentioned a couple paragraphs ago about how back odds work in decimal format. Lay odds work in the exact opposite way since we are betting against an event:
When I make a £10 lay bet at odds of 1.37 I’m not risking £10 to make £3.70. I’m risking £3.70 to make £10. The £3.70 risk is known as liability. Similarly with odds over 2.00:
Here I would be risking £95 in order to make £10. The liability is always (Backer’s odds – 1)*Backer’s stake.
There’s also a second type of odds format that you typically see with bookmakers known as fractional odds. They simply show the potential profit to risk ratio of your bet e.g. 2/1. In this case if you bet £1 and the bet won, you would win £3 i.e. your stake returned with a £2 profit. To convert from fractional odds to decimal odds simply take the fraction and add one to it. This would mean 2/1 is displayed as 3.00 in decimal odds. Similarly with a short price 1/50 would be displayed as 1.02.
Fractional odds + 1 = Decimal odds
Great! So how do I guarantee myself a profit?
Let’s take an example of Ladbrokes‘ sign up offer, bet £50 get a £50 free bet.
In order to get the free bet we will first need to qualify for it by depositing and staking £50 on a game at odds of 1.5 or greater.
Ideally we would like to qualify with minimal loss, particularly without losing our stake! We need to find a game where the odds on Ladbrokes are as close to the odds on an exchange so that we can cover both outcomes of a sporting event. The best sport for reducing qualifying losses tends to be football as this is the most popular sport and hence bookmakers can work off lower overround (Note this disregards arbing which I will talk about in another article). My preferred exchange to use for matched betting is Smarkets as they have a low commission of 2% compared to 5% by Betfair while having a similar level of liquidity for big events (i.e. the amount we can get matched). In the long run this seemingly small difference can make a big difference in our profits.
To find a match manually we can simply trawl through upcoming games for the major leagues such as the English Premier League, Serie A, La Liga and Bundesliga and pay particular attention to short price favourites. A good guideline is to have the lay odds within 3% of the back odds e.g. if the back odds were 1.7, the lay odds should be no more than 1.75. Short price favourites not only tend have smaller qualifying losses but it keeps our liability down on the exchange so that we don’t need to have such a large bank roll.
If finding a match manually is too much work we can alternatively use websites that find matches for us. Simply google ‘odds matcher’ and a few should come up. My personal preference however is to go premium with OddsMonkey. It’s only £15 a month and they have many other features and guides that will make matched betting and making money from gambling far easier. Here’s a match I’ve found today:
As you can see I’ve already calculated the required lay amount to equalise the loss in the event of Tottenham winning and Tottenham not winning (Drawing or Losing). OddsMonkey have a free calculator so we don’t have worry if we have made a mistake in our calculations. So that you have a better understanding of what we’re doing I have performed the calculations manually:
We want to equalise the loss in the event of Tottenham winning or not winning and we also want to know what we need to lay in order to equalise this loss. We get two equations with two unknowns and so we can solve simultaneously (I bet you never thought simultaneous equations would ever make you money!).
If Tottenham wins, we win 0.7*£50 from the bookmaker and we lose our liability at the exchange:
35 – 0.73*Lay = Loss (eq 1) – Remember that the liability is (backer’s odds – 1)*backer’s stake
If Tottenham doesn’t win we lose our £50 at the bookmaker and we win our lay amount at the exchange and pay 2% commission:
-50 + 0.98*Lay = Loss (eq 2)
We can make cancel out the loss terms so that we can work out our lay amount (eq 2 – eq 1):
(-50 + 0.98*Lay) – (35 – 0.73*Lay) = 0
-85 + 1.71*Lay = 0
Lay = 85/1.71 = £49.71
We can then substitute this lay amount into either equation 1 or 2 and find that our loss will be £1.29.
But I’ve just lost money?!
We can now do the same process again but with the free bet that we’ve earnt.
Most free bets, including Ladbrokes sign up, are what’s known as ‘Stake not returned’. This means that we cannot simply place our bet on odds of 1.01, hope that it wins, and get £50.50. Instead we will get 50p. This unfortunately means that we will need to go for higher odds so that we can extract the maximum amount from the bonus. This is tricky as bookmakers tend to offer poorer value at higher odds so it makes the job far easier if we use an odds matcher. Note how Tottenham had odds within 5% of the exchange but Swansea was nearly 20%!
For people with a smaller bankroll try to look for odds around 5.00 as that way you will only need £200 at the exchange. A match I’ve found is Eibar vs Valencia the day after. The odds for a draw are 3.80 at Ladbrokes and 4.00 to lay on Smarkets. We can use the calculator again to calculate that our profit from the free bet is £34.48. Or manually:
If draw: 2.8*50 – 3*Lay = profit; since we win 2.8*£50 from the free bet
If not draw: 0 + 0.98*Lay = profit; we lose £0 since it’s a free bet
Solving simultaneously again gives Lay = £35.18. Since we won £34.48 our net profit is £34.48 – £1.29 = £33.19 from this offer.
There’s easily £1000+ to be made going around doing bookies sign up offers, all mathematically risk free. This should be your cornerstone of earning money from gambling online when starting out.
Here are just some of the sites that have generous sign up offers.
Ladbrokes – Bet £50 get a £50 free bet.
Dafabet – Bet £30 get a £30 free bet.
Gentingbet – Bet £10 get a £10 free bet.
888 Sports – Treble odds on first £10 bet + £5 casino bonus. To do this one try and find the largest odds you can while still being relatively close to the exchange odds. When you enter into the calculator use the tripled on odds in the place of the back odds e.g. if you found a good match at 6.00 (5/1), enter 16.00 (15/1) in the calculator.
12Bet – Place 6 £35 bets get a £35 free bet.
Fun88 – Place 6 £28 bets get a £28 free bet.
TLCBet – Place 6 £50 bets get a £50 free bet.
SportingBet – Place 10*£50 bets receive £50 in free bets.
21Bet – Place 5*£10 bets get a £10 free bet.