Exchanges or Bookmakers?
One of the questions recently asked on the forum (20th June 2014) was "Why use Exchanges when they charge commission?"
RichardC answered this question with:
Horses priced upwards of 10/1 (my reasoning) are significantly better priced on Betfair than the traditional bookie. A horse chalked up at `16/1` with Coral etc. could well have a real chance of 25s and beyond in the land of probability. The `16s` seems to be a blanket price, not a real pointer to the real chance of success. The 5% is easily taken into account over a short space of time. One horse backed at 65/1 on BF when priced at 25/1 at Ladbrookes soon sorts that one out.
Additionally, PhillC reported the overriding problem with using bookmakers
The question regarding Betfair vs Traditional Bookmakers. Your point about the 5% has already been answered, however if you`re interested have a look at a Timeform results page. e.g. http://form.timeform.betfair.com/raceresult?raceId=1.206.1140620.4 The 7.10 from Down Royal last night. The winner`s BSP (Betfair Start Price) is 46% greater than the ISP (Industry Start Price). Worth paying the 5%.
The other thing to mention is that Betfair is an Exchange (although they do now run a regular Sportsbook as well), this means you`re having your bet matched by other people, rather than Betfair itself. They just make their money on commission. However, with the traditional bookmaker, such as Ladbrokes, it`s you betting with the company. If you`re too successful, the company will either restrict or terminate your account. They don`t want winners, just the losers to take money from. I`ve had my accounts canceled with Ladbrokes, Betvictor, Boylesports and William Hill. And heavily restricted (£2 max bets) with Bet365 and PaddyPower. I still have a Corals and Stan James account for "special occasions" but generally just stick with Betfair now as it`s much less hassle.
Also, the more you bet with Betfair, the lower your commission becomes. It`s like a frequent bettor programme.
Betdaq started to make inroads into the exchange market share by lowering their commission rate to 3%. With the number of problems Betfair had in the summer of 2014 and with the lower cost of punting the 'purple exchange', as Betdaq are known, started to see more liquidity and both markets were comparable.
However despite being promised a permanent maximum commission rate of 3% we all found that that our commission rates went up to almost five percent again and so I, along with thousands of others moved back to Betfair. After all, there was no point in reducing our commission points between two exchanges and since Betfair had the better margins it was the place to go back to.
Additionally, using tools to get bets onto the Exchanges is a lot easier than with bookmakers. The people who are happy to write bots and bet placement tools are generally are the sort of people that the bookmakers don't want.
And with Exchanges one can lay horses as well as back them. This means that the possibility of trading out of a position is possible as is trading my itself.
To back up Phill's experience at the hands of bookmakers; have a look at the UKHR Advertising Policy for bookmakers. It is interesting to note that in the last few years not a single bookmaker has accepted our conditions.
My personal choice is for the exchanges; it just makes life a lot easier.