Leverage on Sports Betting

Some questions have been made to me concerning the way I calculated the profit of the prognosis Bilbao vs Barcelona.

I take this topic to clarify that and introduce a new theme: The Leverage on Betting using Betfair.

Leverage is a term used in finance and is related to CFDs (Contracts for Difference) and also with loans.

When we trade CFDs, we are just trading the difference of the variation, which allows to “bet” more money than what we have in our bank. We are leveraging our banking.

Likewise, when a company contracts a loan, that company is leveraging its business.

Betfair allows you to leverage your bank with odds below 2.00, because on Betfair you risk only your liability and not the nominal value of your bank.

I can say that it was essential to my early career as a trader on Betfair because it allowed me to increase my bank much faster.

Look that someone who bets 100€ against Barcelona (using the odds from the prognosis) at 1.38 e then bets in favor at 1.63 odd, wins 15,34€.

However, if you have 100€ in banking, Betfair allows you to bet 263,15€ against Barcelona at 1.38 odd.

This will allow you to close position at 1.63 odd with 40,63€ profit. That is +40,35% on invested capital.

Unfortunately this can only be done with uprising market movements (first Lay and then Back) with odds below 2.00.

If Barcelona’s odd was decreasing, who had 100€ on banking couldn’t Back at 1.63 with 222,79€ stake and then Lay at 1.38 with 263,15€ stake (as in the upper image).

In this case you would have to Back only 100€ at 1.63 odd and then Lay with 118,11€ at 1.38 and you would only win 18,11€.

The profitability of your trades depends on the odd value and on the market direction.

With 100€ liability, if the odd is rising we win40,36€ but if the odd is decreasing we only win 18,11€.

I can tell you that the first time I won more than 100€ in a trade, it was in a match where England was clear favorite and the odd was at 1.09.

At that time I was only working in pre-live and I could get more than 11000€ matched at 1.09 when I had only a bank of just over 1000€.

After that I placed a Back bet at 1.10 and just waited and prayed for that bet to be matched before the match began.

… and it entered