Commission
A betting exchange deducts a so-called commission from all winning bets. This commission ranges from 2 % to 5 % of the net profit. Remember that the commission will be calculated on the net profit only. Let us look at an example:

You bet 100 euro on Chelsea at odds 2,00. Chelsea wins and now you have 200 euro. The net profit is 100 euro and from these you have to deduct the commission– for example 5 %. After you have deducted the commission (5% of 100 euro) your total winnings are 95 euro. If you had made this bet at a traditional bookmaker you would typically have received between 60 and 75 euro. The commission evens out some of the difference between the typical odds at a traditional bookmaker and the odds from a betting exchange but the betting exchange still offers MUCH better odds - dont think anything else! This can't be emphasized enough!

The commission varies a bit between the different exchanges – ranging from Betfairs 5% start commission to Betssons 4% (fixed). Of course it is important to get as low a commission as possible – the greater profit you get. If you loose your bets, there are no reason to worry about your commission… ;-)

It is actually possible to get a reduced commission level, so your profit gets optimized. Most exchanges have decided that the more you play (win) the lower the commission is. In principle it sounds very attractive and as a quite good discount agreement, but the truth is that it is very difficult to get and keep a reduced commission in considerable proportions. In order to do so you have to bet for several thousand before your commission is lowered so much it really can be seen on the bottom line. Some exchanges also have a rule saying that your commision has to be calculated by how much you have played for in the last 7 or 14 days. If you haven't been playing at all or just for a limited amount in the last week, the commission percentage will go up a bit in the coming week. You can ask yourself if it is fair to pay a large commission if your exchange earn a lot of money when you play. The fact is however that the goal of the single exchange is to have the highest possible sales as possible and that they already have a very small margin compared to the bookmakers (they have no scruples about keeping up to 20% of every euro you bet). The commission is the only income that a betting exchange has and the larger the sales the more earnings. They therefore try seducing the punters to play for very large amounts offering them lower commision rates.

Some people often exaggerate the earnings of the betting exchanges when they are irritated by the commission they have to pay. A betting exchange can be a cash cow but for the most exchanges the reality is quite different. The fact is that a betting exchange like Befair doesn't earn 5% of the trade on a football match. Firstly not many punters pay 5% in commission. On the contrary 90% of the sales at the large exchanges is provided by high rollers who only pay a fraction of the commission that the rest of us pay. Furthermore a large part of the sales is trading back and forth between the same punters– so-called traders – and it means that the amounts of matched bets are artificially high. Remember that the commission is only deducted from the net profit.

Important players in a market are also the so-called market makers. Thats people who has a speciel agreement with an exchange saying that they should create some life in the markets - often in the less interesting and illiquid markets. Their commission is often very low - in some cases 0%! It is in the interest of a betting exchange to blow a little life into "dead" markets and then count on that in time a liquid market will be created exclusively based on bets from regular customers on high commission levels. The liquidity is the key to succes for an exchange and therefore no betters are banned - including discrimination against punters (low betting limits) - to develop its products.

The commission isn't something that you should think a lot about to begin with or if you dont play for very big amounts. After all even max comissions at 5% is nothing compared with the MUCH better odds that the betting exchanges offer. You mustn't let the commission play too big a part when you choose your exchange. There is a reason why a market leading player like Betfair can charge 5% whereas certain other exchanges offer a lower commission. Is it any good to pay a small commission if the markets and the odds are accordingly?

Remember that you only have to pay commission when you win. This because when you loose your bet someone else is winning, and then he has to pay the commission. That's why: be happy when you pay the commission - it means that you have won! :-)