Welcome to this week's Finance Fridays. Last week in the aftermath of the EU Referendum I was urging you to Keep Calm and Carry On. For this week we're looking at something completely different. With the culmination of two of the summer's biggest sporting events this weekend with the final of the football at Euro 2016 and the tennis at Wimbledon we are going to be talking about matched betting.
I will say straight away that matched betting is not something I have personally done and I can't endorse any company connected to it. When I started to study to become a financial adviser one of the first things we were taught was to ascertain how risk averse a client was. I have always been someone who is very risk averse and willing to accept a low return in for little risk. Many people will tell you that matched betting is 'risk-free' or simply maths however it is a form of gambling so if this is something you don't agree with or think you may have a problem with then stop reading now.
What is matched betting? - Matched betting is where you take advantage of of the free bets offered by online betting companies or bookmakers ('bookies'). In order to get your business the bookmaker will offer new customers a free equivalent bet if they first place a bet themselves. For example bet £10 and receive a free bet of £10.
How does it work? - If a company is offering a free bet of £10 (this can easily be up to £50 with some companies) and a free bet of £10 you start by using your own £10 to do the matched betting. Normally when betting you place a single bet on an event occurring such a team winning a football match. If they win you win but if they lose you lose all your money. With matched betting you place a bet that the team will win but also that they win lose. To do this you need odds that are the same or very similar for both outcomes. For example with Portugal in the final of Euro 2016 you could back them £10 to win at 5/1 and back £10 at 5/1 for their opponents to win – as this is a final there can be no draw. If it was a group or league match you would place the second bet specifically on Portugal not winning i.e drawing or losing. What ever the outcome you will breakeven. By placing these bets you now have access to the free bet to use as you wish and any winnings you may make will be classed as profit.
Is it complicated? - Yes it is. In order to find the right odds you need to find a suitable event which will guarantee a matched result when placing your initial bets. In most circumstances you will need to find two bookmakers in order to place the initial bets – many people use online betting exchanges. Also be aware that odds can change at any time so don't be caught out with fluctuations and make sure you are always using real time odds. There are many guides available online which can take you through the whole process step by step. Do be wary of any guides which encourage you to sign up to specific betting sites as they are probably making a referral fee through it and they may not be the right one for you.
Will I lose money? - If you get your maths wrong then yes. Also on your first matched bet you may not find exact matching odds so you may lose some money if the winning bet returns a lower amount. To discourage matched betting some bookmakers take a commission which will lower your winnings. Always check the terms and condition of the 'free bet'. Sometimes there will be a time limit in which you will need to place your free bet. Also some bookmakers won't let you 'cash out' or claim your winnings until you have hit a certain level. I have seen this as high as £1,200. This is obviously a way to try to make you place more and more bets. You will also lose money if start placing bets outside of the matched betting system. Never get into the thinking, “I'll win it back on the next bet”.
How much can I win? - Absolutely anything. With your free bet you could put £50 on a 50/1 bet and win £2,500. You could also lose the lot in one go. Many people who use the matched betting system also use the free bet in a matched system. This will probably only make small returns but these can build up if you continue to use the system. If you have tried matched betting and never won anything with your free bet then stop it before you are tempted to start betting with your own money. Also make sure you unsubscribe from any emails from the betting companies as they will be sending you a lot of emails trying to tempt you into betting with them.
Can I keep doing matched betting? - If you work out a method for matched betting and you aren't losing any of your own money then the main restriction will be finding different companies to offer the free bets. Usually they are only interested in new customers. Using different email accounts may work but some companies will ask for personal addresses or will be able to see through your IP address that you have previously registered.
Tax implications – If you live in the UK for tax purposes then any winnings made through gambling or competitions are tax-free. Whether you are an occasional punter or a professional gambler HMRC doesn't distinguish between the two. Whatever you make is free for you to spend or save however you wish. The simple reason for this is that it would be too hard for HMRC to enforce as most people at some stage in their lives have won £10 on the National Lottery or struck lucky on a flutter with the Grand National.
Am I tempted to try matched betting? No, it's not something for me. Although many people say it is a perfectly legal and 'risk-free' way of making money it is still gambling which is something that doesn't sit easily with me. However many people have made several hundreds of pounds through this method and continue to do so on a regular basis.
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