How much is Matchbook's commision really?

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How much is Matchbook's commision really?
« on: May 11, 2014, 02:24:59 PM »

Matchbook claims to charge the lowest commission on the market, but is that true?

Let's say we back a team at odds 2.0 for $1000. Even though our stake is $1000 the amount we actually risk is $1010. Our potential winnings are $990.

If we had bet $1010 at 2.0 at any other book our potential winnings would have been $1010, $20 more than in Matchbook. Therefore the real commission is $20 which is 1.98 % of the potential winnings.

This is true as long as the odds are 2.0 or higher.

Let's say now we back a team at 1.5 for $1000. The real risk amount is $1005 and the potential winnings are $495. Risking $1005 at 1.5 at another book could yield $502.5 in profits. Thus the real commission is $7.5 which is 1.49%.

It's not a coincidence that the real commission is about the same as the odds. For odds below 2.0 the real commission is always equal (approximately) to the odds and of course we are making significant saving over Smarkets.

When we lay the situation is reversed. We pay about 2% for odds 2.0 or lower but considerably less on long odds.

So Matchbook's claim to offer the lowest commission is true though not as advertized. The real drawback is of course that commission is charged on every bet. There is no offset and that hinders trading and other strategies but Matchbook has made great progress over the last year. They are making a big effort to promote football but an area they have traditionally been very strong is US sports. In NBA Matchbook will often beat Pinny's offer prematch and with good liquidity even during the regular season. Let's hope they grow even more in the following years.

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