For those unfamiliar with the world of Sports Trading and
trading this area of the market can appear to be quite confusing
and quite unlike other standard financial products and spread
betting markets.
Prior to the launch of the betting exchanges the process of
placing a bet with a bookmaker was a simple process. The bookmaker
would list prices for an event in the form of odds and clients
would place a fixed amount with the bookmaker thus knowing exactly
how much they could win and, as importantly, how much they could
lose.
Traditional bookmakers continue to display odds in this way and so
a price of 4/1 about a horse to win a race means that the bookmaker
is saying that this horse has a 20% chance of winning the race, or
for every 5 running's of the race the horse would win 1 thus
represented as a 4/1 chance. Placing a bet of £10 on this
horse would return winnings of £40 or a loss of £10 if the horse
failed to win the race.
In the past odds were always been displayed as fractional
prices but the advent of the betting exchanges has meant that that
a decimal presentation is now becoming more common, especially on
the betting exchanges and with overseas bookmakers. Odds of 4/1 are
displayed as 5.0 and whilst this is a different presentation to the
norm the mechanics remain largely the same. The 5.0 displayed means
a £10 bet will return £50; £40's of winnings and £10 of
stake.
In the past, sports betting and sports trading has focussed on the
backing of an event to happen, ie a team to win a game, a horse to
win a race or a player to win a tournament. A new game in town now
exists where traders on the betting exchanges are invited to become
the bookmaker and to offer their own prices on events.
This is known in the market as 'laying' and allows clients to
take a view about hundreds of sporting events (and even reality
television!) and to take a view about an event not happening.
This is a concept that can seen with binary trading and has
proved very popular with the betting and trading community and is
sure to continue the increase the market size in the coming
years.