This
is a rather interesting article I came across. I have
made certain changes to put it in the Australian vernacular
and reproduce it here for your interest.
I'm not going to say emphatically
that there's no way of earning a living on the betting
exchanges, I'd be a fool to say that and it would look
like sour grapes because I'd failed to make
any money. No, I wouldn't
say it is impossible to earn a living on the betting exchanges,
but over 5 years I went from thinking it looked too easy
to financial meltdown and depression. I just wish I could
have found an article like this, but in those days the
betting exchange concept was new and nobody had any substantial
experience to share with others. All there seemed to be
was a barrage of systems and tipsters telling us that
now we could all be like the bookies...and had you ever
seen a poor bookmaker?
It took me a while to grasp
the concept of the betting exchange; well to be honest
I was completely new to gambling. I'd never gambled money,
not even pokies. It just didn't interest me. I remember
as a child spending a lot of time in working men's clubs
where I'd practise with a brass band, often up to 4 times
a week. In those days it was only private clubs that could
have the big payout machines. I used to see mostly the
same people week after week pushing a fortune into the
damn things. It just seemed crazy to me. However, many
years later I got to know a professional "pokie player
" who lived in a new house, owned a new BMW and had
no debt all through playing poker machines! The difference
was, though, that he was working to a carefully worked
out formula and only playing on particular machines that
met certain strict criteria. He also worked hard at it,
travelling the length and breadth of the country looking
for the right machines and when he found them fearing
for his health and safety as he went about his work. You're
not entirely welcome when you suddenly appear in a local
community pub and empty the poker machine of all their
money!
I realised at this early
stage though that I needed to work systematically to a
formula and only bet when my strict criteria was met.
I was looking for a small niche that I could exploit.
I'd then have my own cash-making machine that I could
switch on and off as I chose. Earning a living on the
betting exchanges is such an attractive idea. From the
comfort of you own home, or anywhere else with Internet
and a laptop, you can quietly and simply make a lot of
money and it's tax-free. I'd previously looked into and
had indeed tried many other business opportunities like
MLM, running a vitamin and mineral website, promoting
holidays etc. and they all seemed, by comparison, so laborious.
Not only having to pay for advertising, submit to all
the search engines and directories, but also to pack stuff
up and sent it out to people.
The betting exchanges do
seem the fairer gambling option (if you're familiar with
them then skip to the next paragraph). The exchange matches
up a backer with a layer, someone who thinks a horse will
win with someone who thinks it won't. The market agrees
the price on a pure and simple supply and demand basis.
If a horse looks like it's a good winning bet there won't
be so many people prepared to oppose it, this means the
backer will have to take what price they can get, which
will be low. However, some layers are still prepared to
offer the backer a bit more, they're so desperate to get
their bet matched up. But their money is quickly gobbled
up and then backers have to be prepared to take lower
prices again. Mind you, if the horse then starts to display
worrying signs down at the start I.e. it's sweating up,
or won't go into the stalls or, even worse, runs off delaying
the race and wasting precious energy. All of a sudden
it's not such a sure fire bet and new backers will demand
better prices from the layers, who will certainly oblige
now they're even more convinced that the horse will lose.
The price starts to drifts out. Incidentally, the opposite
of drifting out is tumbling in; this is exactly the same
but in reverse. What's in it for the betting exchange?
Well the exchange takes a commission on the winning outcome.
So if you're the layer and the horse loses you take the
backers stake minus the betting exchange commission, if
the horse wins the race the layer pays out to the backer
and the backer's account is debited for the commission.
The commission works on a set percentage of the winnings,
so the exchange make more when the horse wins, but because
the exchange gets paid something whatever the outcome
they're not bothered if you're too successful. You're
not going to get your account closed unless the exchange
spot suspicious patterns of betting which could indicate
something more serious.
It's widely acknowledged
that the sensible money is on the exchanges. If you check
back over time, the chance of a horse winning as expressed
by its odds and the actual outcome of the race is pretty
much the same. It is a very efficient market. I'm referring
to just horse racing here, but it's probably the same
right across all the sporting events available on the
exchanges. So if the horse goes off at 4/1 shown as 5
on the exchange, over time you'd expect 5/100 of them
to win, or you'd expect a win 20% of the time. Don't make
the easy mistake though of thinking that because the price
is high you stand more chance of being successful as a
layer; remember the market is very efficient. You may
have a killer week and clean up, but there will be a correction
and, taking the commission into account, you'll probably
end up out of pocket.
I've just touched on one
of the big problems when laying horses. It's the
psychology problem. When you lay it's an odds
on bet most of the time and you only get the backers stake
minus commission. If you have a brilliant week or month
and hardly suffer any horses winning or probably none,
you can start beating yourself up for not being a bit
braver and putting more money on, or, even worse, you
scrap your staking plan and replace it with a far riskier
one. After all, you've just realised that had you spent
the last month staking higher you would have filled your
boots! You may also feel like you've cracked the money
thing, you are a master of the universe. I'd never earned
money this quickly before, I earnt $3200 in 4 days at
the start! Naturally you start spending more, as your
respect for money starts to dwindle.
I mean, hey, I've sussed this out; I don't ever have to
worry about money again. I am a betting exchange maverick
now. You'll probably even get friends and family involved
and they'll probably do exactly the same as you! But then...
...Oh dear...Now don't feel
too foolish, aren't we basically seeing the results of
exactly the same type of behaviour from our major banks
at present. They had the same departure from reality;
you see few people are immune to it. The correction comes
and when it's laying horses it's as dramatic as the recent
stock market plunges. You can lose months of hard earned
winnings in a few bad days, or even on one very bad day.
What compounds the problem is that you lose your nerve
so you cut your stakes right back, which prevents you
from making as much back as you should. You now try to
correct this by upping your stakes again, but, oh no...they
all start winning again!
Now any strategy you had
has gone out the window as you grab for the next credit
card in desperation. You feel physically sick as your
dream of a new life evaporates and a life of serious debt
replaces it. You go out and spend a few hundred on a laying
system from some exchange "guru" but it's no
good after a few weeks work the same thing happens again!
The emotional effect of this, the strain it places on
your family and health is like nothing else I have ever
experienced.
You know the right system
is out there, but are you going to be broke or institutionalised
before you find it? And the worse thing is you may have
spent hours a day for many years working your socks off
trying to find the right strategy, but people will just
think you're an irresponsible problem gambler. You feel
utterly damned..."what have I done to deserve this
thrashing?" etc...
Well you've done nothing
wrong, nothing more than most people would've done in
your situation. The problem is if you don't show a bit
of entrepreneurial spirit you know you'll never stand
a chance of a better standard of living, but it's unlikely
that the very first big project will succeed. Probably
best to leave everything entrepreneurial for a few months,
re-establish your health and well-being and then look
for something else. And, sure enough, all the experiences
you've had will help you to recognise the right thing
when it does come along.
Although I've taking a ravaging
from my trading experience there's part of me that respects
the fact that I had the courage to try it and I can certainly
talk about the whole gambling idea with a degree of authority.
So, I'd say it is possible to earn a living on the betting
exchanges, but I hope you're getting an idea now that
it's not quite as easy as it's sometimes hyped up to be
and there are many other legitimate and ingenious ways
of making money from home.
About the Author
Richard Pells is a self-employed musician living in Leicestershire,
UK. He has been self-employed for nearly 20 years and
earns a living from teaching and playing music.
