Betting at the Betfair Starting Price (SP)

Traditionally the starting price for any horse in any race has been determined by the on-course bookies who cook up an aggregate price or odds. Not surprisingly, their starting price is edged towards them making a profit.

Betfair's starting price is different. It's based on the number of backers and layers in any market - there is no margin for profit built in - and that's why we think it will give you the punter considerably better odds.

Unlike other bookmakers' Starting Price, the Betfair Starting Price will be determined by balancing bets from customers who want to back and lay at Starting Price and matching into the Betfair exchange markets to balance out any residual demand.

The Betfair Starting Price will be calculated exactly to ensure the fairest and most transparent odds possible for both backers and layers. The Betfair Starting Price does not need to account for a profit margin but instead is calculated at the start of an event by looking at the relationship between the amounts of money requested at SP by opposing betting parties. To give an even more accurate price, we will use money where possible that is trading on the exchange at the start of the event. This gives a true reflection of public opinion on a selection.

Firstly, you need to have the Betfair Starting Price box ticked above the market view. This will bring up new columns in the betting matrix allowing you to back/lay your selection at SP. You then just need to click on the relevant box marked SP

You will be informed of the price you are on at once the market is turned in play and the event has started. At this point your bet will effectively be matched against opposing betting parties.

If you are laying on the exchange at requested odds, you are asked to specify the backer's stake you would like to try to win and your liability is calculated for you.

With SP betting, layers are asked to specify a liability (rather than a backers stake) so that we can reserve in exposure the full amount that they may need to pay out. Layers at SP will therefore not necessarily know how much they could win until the start of the event. Backers at SP specify their stake as normal. This is reserved in exposure and matched at the off.

One of the main advantages of the Betfair SP is that there will always be a Starting Price (as long as the event takes place) and your bet will always therefore be on. Unmatched bets will be a lot less frequent with the introduction of this functionality. One major disadvantage of SP betting is that the price may be much less favourable than the bettor was expecting. You might be willing to take SP, but only if it is better than a specified price. Traditional bookmakers don't offer this type of bet, but Betfair have created an SP mechanism that accommodates this. Similarly, for lay bets, you can specify a price beyond which you are not willing to lay the selection. The client simply selects the limit option when placing the SP bet and specifies the minimum acceptable odds for back bets and the maximum acceptable odds for lay bets. If the Betfair SP falls out side the limits specified stakes are returned and the bet is not matched. This enables Betfair to calculate the minimum profit you will make on the selection if the result goes in your favour.

(Min Odds - 1) x Stake = min profit

Liability / (Max odds - 1) = Min Profit

You will never know what the true Betfair SP is until the event starts, however, Betfair will offer two calculations of a projected SP. These can be displayed on the market view by clicking on More Options and then selecting your preferred choice under Projected Odds. The actual Betfair Starting Price will use the first option which we call the Near Price calculation.

The second option shows both Near Price and Far Price calculations in the same view.

The Near Price is based on money currently on the site at SP as well as unmatched money on the same selection in the exchange. To understand this properly, you first need to understand the calculation of the Far Price, which only takes into account the SP bets that have been made. The Far Price is not as complicated but not as accurate and only accounts for money on the site at SP.

Excluding money requested at a fixed price on the exchange, if there are £1000 worth of backers stakes on a selection at SP and £6000 worth of layers liability, we can return an SP at the start of the event of 6/1 (7.0).

If however there were £6000 worth of backers stakes on the selection and £1000 worth of layers liability, we would return an SP of 1/6 (1.17). These are calculations of the Far Price.

Here are a couple of examples which detail why the BSP may change in order to match not only SP bettors but those trading on the exchange as well.

Using the numbers from one of the above scenarios, let's assume customers are betting on a horse called Dobbin.

Notice here that the profit and loss of backers and layers is inversely proportionate whether Dobbin wins or loses (IE - whatever the backer wins, the layer loses and vice versa. This ensures everyone can always be paid.)

At the start of the race, all these bets would be matched yet there would be a lot of unmatched bets undoubtedly on the exchange and probably not trading at the price of 7.0.

For this example, let's assume that the horse is trading at 5.0 on the exchange. By returning an SP at the start of the event of 5.0, we can not only match all the money placed at SP but also some of the backers money waiting at this price on the exchange as well. This is how it works:

Notice now that the profit and loss is no longer inversely proportionate. (IE - there is not enough money to pay the layers if Dobbin loses). This is rectified by matching money from backers on the exchange. (X backers)

Now the total profit and loss is balanced whether Dobbin wins or loses.

By decreasing the odds of the SP to the price trading on the exchange at the start of the event we are able to match another £500 worth of exchange backers.

The Near Price here would be 5.0

Let's look at the same example again but see what happens if the price trading on the exchange is larger than the true SP of 6/1 (7.0). Let's imagine it drifts out to 10/1 (11.0).

As before, the profit and loss is not inversely proportionate between backers and layers, but this time there is not enough money to pay the backers if Dobbin wins. Therefore we can match extra money from layers on the exchange to rectify the situation. (X Layers)

Now the total profit and loss is balanced once again whether Dobbin wins or loses. Remember that at SP, layers specify their maximum liability whereas on the exchange, they specify the backers stake that they would like to try to win.

By increasing the odds of the SP to the price trading on the exchange at the start of the event we are able to match another £400 worth of exchange layers.

What is the projected SP if no money is bet at the Starting Price?

The system would find the halfway point between the best available odds to back and lay and show this as the projected Betfair SP. In reality, there will almost always be money on the site at Betfair SP.

It is not possible for you to cancel a bet you have placed on the site at SP. This is so that we can provide an estimate of the true Starting Price based on money committed to betting at SP. If bets could be cancelled, this estimate could be artificially manipulated by placing a large bet and then subsequently nullifying it. If however you have converted an unmatched exchange bet so that it matches at SP when the event starts, you can still cancel this up until the time of the off.

The minimum stake for a back bet at BSP is £2 or the local currency equivalent as per normal. The minimum liability is £10 or the local currency equivalent.

The party against whom you are betting when you take the SP option is consistent with the main Terms and Conditions that govern your use of the site. For example if you are a UK customer then any SP bet you place will be matched against another customer(s), but if you are an Australian customer betting on a non-Australian event, then your counterparty is Betfair.

The P&L will only reflect your SP bets once the event has started and the bets have matched at the reconciled Starting Price.

The projected P&L cannot be displayed using the 'what if' feature within 'More Options' because there is no price to base the calculation on at this stage. For traders wishing to offset liabilities at BSP, they will have to do so in running.

If for whatever reason the site is unavailable when an event starts, Betfair will determine the SP using all available information. For the avoidance of doubt this information will not be limited to betting activity on the relevant Betfair market(s).

No. We have made the time to turn markets in play more quickly. This will involve some technical changes at our end and delaying the deletion of lapsed bets but nothing which will impact customers. Money reserved in exposure will still be returned immediately.

Betfair SP bets on a non runner will be handled according to the market rules. In most cases, the bet will be voided unless the bet was on an Antepost market in which case the bet will stand.

For SP back bets, Betfair will at no point amend either the stake or the odds requested by a customer, despite any non-runners or withdrawals. The BSP generated will reflect the greater chance of winning. However in all cases customers can reduce the minimum SP odds they are prepared to accept on a selection.

For SP lay bets on win markets, Betfair will reduce a customer's liability based on the reduction factor(s) of any non-runner(s) and the reduction factor of the runner on which the bet has been placed. This is to ensure that the balance between the backers' stakes and the layers' liability reflects the revised market after the runner has been removed.

For example if a horse with a 50% reduction factor becomes a non-runner, then another horse in the same market priced at about 5.0 (i.e. a reduction factor of 20%) will change to a price of about 2.5. Therefore the liability on a £200 lay bet on that runner will need to change to a liability of about £75 to ensure that a balancing back bet will have the same £50 stake.

This is done by multiplying the liability by 100%-(50%/(100%-20%)) = 37.5%.

Where the lay bet has a maximum odds limit specified, this will be reduced by the reduction factor of the removed runner. Note that, unlike exchange lay bets, SP lay bets will not be cancelled when there is a non-runner.

If the SP reconciliation process is undertaken too early (for example if a horserace is turned in-play in error), then Betfair will endeavour to reverse the reconciliation so that the SP is determined when the event actually starts. There may however be circumstances in which this is not possible, in which case the SP will be based on the initial reconciliation.

If the SP reconciliation process is undertaken later than scheduled (i.e. after the event has started), the SP will be determined based on SP bets only, placed before the 'off'. SP bets placed after the 'off' will be voided.

No. Currently there is no immediate plan to offer SP betting across Multiples.

Yes. Your bets will show in Current Bets at SP along with any odds limit you may have set yourself.

Previously on Betfair, we would try to subsequently match all bets that were fully or partially unmatched, but these would 'lapse' and be cancelled at the start of the event.

You can still choose for this to happen if you wish but we are giving that decision to you to make. Alternatively, you can decide to make use of our Bet Persistence functionality and keep the bet once the market turns in play. This allows you more of an opportunity to get your bet on although there is still no guarantee you will get your price if the market goes against you.

You can also choose to convert your unmatched exchange bet to an SP bet at the start of the event which will ensure it goes on and gets matched.

Please note again that you can cancel an unmatched exchange bet that has been converted to an SP bet before the event starts should you wish to.