Bookmaking - ‘Being the bookmaker’
Bet Angel’s powerful bookmaking feature allows you to act like a bookmaker and lay bets to a market for other users to back. Traditionally bookmaking has been the preserve of established circles but with Bet Angel and betting exchanges bookmaking is now simple and within the reach of the ordinary person. Bookmaking is a simple strategy and one you can use on any market as it is does not rely on any particular knowledge of the underlying market.
The concept of bookmaking
Bookmakers make money by laying odds on an event at a price above true odds. This makes the people who are backing an event pay more than 100% for an outcome that can only possibly end with a 100% chance. This is why trying to beat the bookmaker has always been incredibly difficult. In a five horse field any one of five horses will definitely win the race, there is a 100% chance of that happening. If you can sell the book at 110% you know you only have to pay out a maximum of 100% and the remaining 10% will be your profit. If you look at this as a backer, you are buying 100% for more than it’s worth and you will always lose. That is unless you know something significant enough to turn over the bookmakers built in margin.
The art of bookmaking has always been to create a balanced book. You need to take money from backers in equal proportion based on the odds you have offered. The odds you offer should have some profit margin for you. If you can’t do this your risk is out of proportion to your potential pay-out and you could face a large loss. For traditional bookmakers their role was pretty clearly defined, they needed to split opinion as this would nearly always produce a balanced book and therefore make money. In modern betting markets splitting opinion is no longer an option. The market is free from your influence and people pick and choose their own prices. Therefore you need to price the book at a level that ensures that you can get all your bets matched as quickly as possible. Any unmatched bets will leave an ‘unbalanced’ book and a potential loss for you!
Awareness about bookmaking on a Betting Exchange
When you lay a book to the market and complete it your trading bank is immediately available for further activity. This is extremely beneficial as exchange margins are small so you can use a small trading bank to repeatedly make a book and improve your overall margin in the market.
You do need to be aware not to make a book in a false market. If you lay a book and have failed to account for withdrawn selections you could face a substantial loss. Please make sure you understand the market you are bookmaking in and ensure you clearly read the rules of the market to assess any possible impact.
Using the bookmaking function in Bet Angel
When you enter the bookmaking screen you will see the market that you have chosen and a list of selections in that market. You will also see a reminder that bookmaking only places lay bets in a market. When you make a book you only lay selections to the market you do not perform any other task. We put this reminder in because there are actually several options available for you to lay orders into the market. You don’t need to lay at the current lay price.
Your overall objective is to create a book above 100%; there are many ways to do this. But in order to make a book above 100% you have to put some orders unfilled into the market. Using Bet Angel you can choose whether you lay at the current lay price, at the current back price or whether you nominate your own price.
Selecting a staking method
Your first task when making a book is to select a staking method. Click on either of the methods to decide what your objective is when creating a book. If you “lay with a stake of” your liability is fixed but your profit varies according to the margin in your book.
If you ‘lay for a target profit of’ your margin is fixed by the book you create but your stake varies. Lay for a target profit has to be used carefully as it can generate very large stake values. This is because you may be working on small margin and in order to generate your required profit Bet Angel needs to place large orders into the market.
Bet Angel is able to place books on Betfair for small values but in order to ensure you comply with your betting exchanges terms and conditions you can set up a book to ‘lay for a minimum stake of’. This ensures you do not place bets on the exchange below the minimum value specified in your terms and conditions. If you choose to create a book with bets below the minimum value stated by your terms and conditions we cannot guarantee that these bets will enter the market without error or complications as the process to achieve this is complex. We do not condone any abuse of your terms with the exchange and suggest you always try and comply with these terms.
Another setting you should pay attention to is the ‘winners’ box. If you are a making a book on an outright market your target book % is over 100%. If you are in market with two possible winners your target book is actually any value over 200%. Therefore if you set the winners to two, Bet Angel will adjust the book % figures to go green if the book exceeds 200%. You need to be aware that the winner’s box does not influence predicted profit calculation at this moment in time.
Creating your book
Once you have decided what your stake value will be set at you need to create your book. To create your book you need to decide what prices to give each individual selection within the book. Rather than pricing each selection manually we have included a series of tick boxes which allow you to create your book quickly and easily. If you click anywhere within the row of this tick box you will automatically price the market and Bet Angel will work out the stake for you. You can see the columns are headed ‘back’, ‘lay’, ‘manual’ and ‘margin maker’. If you click on the ‘Back’ box you will make a book by laying at the current back price. If you tick ‘lay’ you will make a book by laying at the current lay price and so on.
At the top of these columns you will see an ‘ALL’ option. To create your first potential bookmaking position click the ‘Back ALL’ tick box and you will notice all the tick boxes under the back side are active. This means you will be creating a book by laying everything at the current back price. At this point you have not actually placed any positions in the market you are just looking at what positions you could take. You can see from the book% figure in this screen shot that the book is at 101.0%, this value is also green. It is green because if all your orders in this market are filled you will be laying 100% liability into this market for 101.0%, you will make money. If the book% figure goes below 100% then you will not have made a profitable book and you will need to change the odds selections to create a profitable book.
In the example we have given, because you are laying at the current back price you can press the place bets button and this will place the orders into the market. You can do this safely as all your current bets will be unmatched. Your screen should show all the unmatched bets in the ‘unmatched bets’ window. For your book to complete profitably you need all these orders to match. To get familiar with the software you can place these bets into the market and use the cancel all button in the unmatched bets area to cancel all these outstanding orders.
In this particular example we have let the bets run and there were matched a little later. As previously discussed as soon as the book is complete our balance is available to use again. Now this order has completed we can make another book and increase our profit on this event while at the same time lowering our overall risk.
It is possible to create a book in any market but obviously the more selections there are the more potential you have that your book will not be completed fully, i.e. your bets will not be completely matched. In the example we have detailed you can see we have laid two of three prices at the current lay price and only asked for one order to be matched at the current back price. Despite this there is still margin available for us on the book. While this has allowed us to create a book that is likely to fill profit maximisation is usually the best route to follow for book creation.
Bookmaking concepts
In the following example I have selected an evening soccer match from the Portuguese league and made a book on that match. I have no idea who Maritimo are or what there form is, but then I don’t need to as my anticipated position isn’t relying on this knowledge. All I am looking to do is ‘sell’ 100% probability for more than 100%. In this case you can see I have ‘sold’ my book to the other punters on the exchange for 101.2%. For a £500 stake we would net £6 for our efforts if all our bets get matched. Doesn’t sound a great return from a traditional betting perspective but obviously this isn’t traditional betting.
If you want to nominate a profit target then you can also do that in Bet Angel. In the next image you can see we have ‘asked’ for a £10 profit. Bet Angel tells us that we would need to stake £828 to get this profit! That doesn’t so that appealing so what can we do about this? There are some useful tricks on exchanges you can use to achieve the same profit without the same risk.
The first method is deceptively simple. One of the unique characteristics of the exchanges is the ability to recycle your money through the market. Say we placed our first position in the market we would net a £6 profit after all our bets were filled. As soon as our bets are filled we get the chance to re-use our money, the exchange makes the money immediately available to us again. This is quite a radical change from traditional betting markets where your money is tied until the betting event is over. So we simply repeat our bookmaking again. If we completed three books in this market before the start of the match we would have only used £500 but turned a profit of £18, a bit better than the £6 we thought we would get. If you still don’t like the idea of using such large stakes to generate such a small profit why not go for a variation on a theme? In the next example we have used the clever margin maker function on Bet Angel to create a book for us to generate margin subject to what happens in the match.
