What does it all mean?
Let's start by looking at a Betfair screen and explaining what it all means.
1. What do all these numbers mean?
Each box on the Betfair screen shows the odds (top) and the amount available (bottom) at that moment in time. Prices aren't locked in place, nor is the amount of money available, because bets are being offered and matched all the time. So if the price you like isn't showing, or there's only a small amount of money available to bet, hit the Refresh button and watch it change. Better still, you can place an offer and wait for someone to match your bet. See Unmatched Bets for more details.
There are three key reasons why Betfair uses decimal odds rather than traditional fractional odds:
A - Easier to understand
Which is the bigger price - 8/13 or 4/7? If you're not familiar with the set of fractions bookies use, then it might take you a while to work out which is better. Most of us didn't spend a great deal of time at school worrying about anything more than the most common fractions. Using decimal odds, you would instantly see that 1.61 (8/13) is bigger than 1.57 (4/7).
B - More options
A betting exchange couldn't work using only fractions, there just aren't enough fractions to cover all the options available. Decimals allow smaller increments and better competition for prices. Instead of 2.5 (6/4), you could ask for 2.52, 2.54, 2.56 or 2.58, which are all available on Betfair before the next standard fraction of 2.6 (8/5)
C - Worldwide standard
The UK and Ireland are two of just a few countries still using fractional odds. Decimal betting is now the standard around the world and offers more choices. International customers equal more liquidity across a wider range of markets.
Decimals don't take long to learn, and in time, you will find them far easier to use. The key part to remember is that decimal odds always include the unit stake - thus every price you see on Betfair will be >1.
Fractional odds represent the profit - 5/1 means you will win five pounds for every one pound staked.
Decimal odds represent the return - 2.2 means you will receive £2.20 for every pound invested, including your stake.
Don't worry if it takes you a while to get the hang of them, there's a mouse-over option on the betting screens to show the nearest fraction to the prices you see, plus in the Help section to the right of every market, there is an Odds Converter table.
Betfair is not a bookmaker where traditionally one person or one company tells you what the odds are, and your choice is take them or leave them. Betfair is a marketplace which brings together buyers and sellers - or in the case of betting, backers and layers.
Imagine the busiest marketplace in the world - a stock exchange. Before the digital age took over, the trading pit was a great mass of stockbrokers wanting to buy or sell commodities, shouting out prices and rushing around madly to agree deals (PHOTO). A broker could stand there all day shouting out prices and "Buy, Buy, Buy", but until another broker agreed to be on the other side of the deal (Sell), then there was no deal. Every transaction must have a buyer and a seller.
In a nutshell, that's what Betfair is, but the 'commodities' are selections in a sporting event, and the 'brokers' are punters like you or me, who wish to bet on or against a selection.
Every set of odds you see on a Betfair screen is a live price, available to match. There is no history there at all, every offer is in the queue to be taken with the coloured columns highlighting the best odds currently available - the highest of the 'to back' offers and the lowest of the 'to lay' offers. If you are backing, you want the best price you can get - higher reward for the same risk. When laying, you want the lowest price you can get - lower risk for the same reward.
This is one of the best, but also most confusing, features of a betting exchange. Since Betfair is a community of punters competing against each other rather than a bookmaker writing the odds on a board with chalk like in the old days, the markets will keep changing. The nearer to the beginning of an event it is, the more likely the prices are to be constantly fluctuating. That means more opportunity for you to get better odds, but it also means you can miss out on a bet if the odds go against you.
Horse races in particular are very volatile, but the same can apply to any event which goes In-Play. More on that later. As we've mentioned before, Betfair is like a stock market, and prices can move very quickly. On the web page, the normal refresh rate when logged in is around 30 seconds, but in reality, the server could be matching hundreds of bets per second, so you don't always see every offer on screen or price move. They could be snapped up and gone by the time your screen refreshes, even if you are clicking the Refresh button regularly.
To make sure you get matched, you can ask for a lower price (when backing). The Betfair system will always match you the highest offer available - so if you ask for 2.6 and at the instant your bet reaches the Betfair server 2.8 is available, you will secure the better price (2.8). This also works for laying, but the other way around - layers always want the lowest price they can (less risk), so ask for higher and the Betfair server will match you at the best available, in this case the lowest odds. You can click on all of the boxes across the Betfair screen, you don't have to always click on the coloured column for best price. The Betfair server always uses Best Price execution logic (take the best price available).
If the odds move against you, you may end up with an unmatched or partially matched bet. Read this section for more details.