SP and BSP betting
An intrinsic element of betting is the odds. They are a mathematical expression of the likelihood of something happening, and indicate the potential winnings from a bet based on the stake. Odds (or bookmaker’s prices) can seem confusing, but once you have grasped some of the basics, they are clear and unambiguous. Any punter that is new to betting should first understand odds.
Betting fundamentally involves trying to predict the outcome of events. These events are usually related to sports but bookmakers also offer novelty bets in Politics and TV Specials and other niche categories. There are a number of outcomes for any event.
For example, tossing a coin results in either heads or tails. There is a 50/50 chance for each outcome, so the true odds are Evens (also expressed as 1/1, or 2.0 in decimal odds). However, typically a bookmaker might offer 10/11 for each outcome, in order to increase the likelihood of an overall profit from multiple people betting on tosses of a coin, multiple times.
Fixed Odds Bookmakers
Traditionally, a bookmaker offers fixed odds in betting markets. Odds compilers create the prices and customers bet accordingly. In the UK, odds are linked to the race tracks which express odds in a certain way (see below). Fixed odds bookmakers issue markets on something to happen. The odds represent the probability of an outcome. Bettors place bets, and the stake and the odds determine the return and profit from a winning bet.
The Betfair Betting Exchange
A new concept in betting emerged at the start of the century. A small operator introduced peer-to-peer betting on an exchange. The company was purchased by Betfair who developed the model and they now dominate the exchange betting market. The site brings together bettors who want to bet on an outcome and others who want to bet against (lay) an outcome. Back and lay bettors make a trade at a mutually agreed price. Bets are fully matched, partially matched or rejected.
Bookmakers and Betfair express odds in different ways. Each type of operator has a default format and this can be changed by selecting an alternative from a menu. The odds format largely depends on locality but there is now more consistency across betting nations. The formats are as follows:
Fractional odds are the default on UK-facing betting sites. These odds are based on the betting markets on racetracks. Betting offices display odds in fractions and most UK customers are comfortable with this format. Fractional odds show two numbers separated by a stroke (/). As well as showing the probability of something happening, they also indicate the value of a bet. The first number indicates units of profit, and the second indicates units of stake.
For example, fractional odds of 2/1 means the profit from a winning bet would be two times the stake. So you’d win £2 profit if you staked £1.
To better understand fractional odds that aren’t expressed as whole numbers, i.e. they don’t end in ‘to one’ (such as 2/1, 25/1 or 9/1), other fractions can be used. For example, fractional odds of 9/4 means the profit from a winning bet compared to the stake would be 9 units compared to 4 units. In other words, you’d have to stake £4 to win £9 profit.
9/4 read as a fraction is nine quarters, which makes two and one quarter. So 9/4 is just an easier way of expressing odds of 2 ¼/1.
Decimal odds became widespread in the UK as Betfair grew. Betting exchanges express odds in decimals and Betfair is the biggest betting exchange in the world.
Decimal odds include the stake rather than expressing it separately after a /. Therefore, fractional odds of 2/1 are represented by 3.0 in decimal format. A bet of 1 unit returns 3 – which comprises the stake of 1 unit and profit of 2 units.
Decimal odds can contain one, two or sometimes multiple decimal places, but they always work the same way.
Other formats of odds
There are a number of other odds format which are widely used in other parts of the world:
• Hong Kong
These formats are slightly different but all the odds serve the same purpose of indicating the probability of an outcome in a sporting event.
The Starting Price (SP) is generally associated with horse racing in the UK. Observers on the track note the average price offered by on course bookmakers as a race is about to begin. This price is reported back to off-course bookmakers and an official Starting Price is declared. Bets are settled at the SP when the bettor does not specify otherwise, but bettors can choose the advertised board price when placing a bet. Some bookmakers settle bets at the best odds between when the bet was placed and the start of the race. Starting prices are adjusted for Rule 4 Deductions (when a horse due to run in the race is pulled out) and dead heats (when two or more horses finish so closely they cannot be separated. In this case your stake is divided by the number of horses in the dead-heat, and your profit is calculated from there. The other part of your stake is not returned). The SP format is fractional and applies to other sports in a slightly different way. Bookmakers offer fixed odds for sporting events which do not incorporate an SP.
Betfair Starting Price
Betfair customers effectively place back and lay bets against each other at a mutually agreed price. Bets are matched when the ‘backer’ and ‘layer’ are happy with the odds. Betfair have also introduced the option of the Betfair Starting Price, widely known as BSP. The operator works out the average price that attracts back and lay bets just before an event begins, in a process that replicates the creation of the SP on race tracks in the UK. If they don’t want to accept the odds being offered at the time of their bet, but also don’t want to miss the opportunity to get the bet on, backers can elect to place a bet at the Betfair SP.
BSP is expressed in decimals and is usually bigger than the SP, due to the increased competition within the market from different lay and back bettors, and the opportunity to request better odds than those currently being offered. This effectively makes for a more democratic, fairer betting model – hence the ‘exchange’. This is not something you can do with fixed odds bookmakers, whose odds are generally shorter as they build in a wider profit margin to their markets (Betfair makes its money not from profit margins but from commission), and often lose customers to Betfair simply because the BSP generally offers better value than the SP.
Comparing SP and BSP
Here is a typical comparison for a horse race that took place at Kempton Park in the UK at the end of October 2019:
PlaceHorseStarting Price (SP) Betfair Starting Price (BSP)
2nd Mr Thoughtful 20/1 23.00
3rd Lilkian 9/2 6.00
Generally, the BSP offers about 10% more value than the SP.