Commission is charged where a sportsbook hides its margin
An exchange does not build a profit margin into the price you see. It charges commission instead — usually on the net result of a market rather than on each trade. That sounds like a technicality until you do the arithmetic on a small win.
What it is charged on
The basis of the charge is the thing to check on any exchange you use, because it is defined by that operator’s own rules. The common bases are:
Commission rates, minimum charges and the definition of a market all come from the operator’s own rules and can change. The only figure that matters is the one shown on the account you actually use.
The arithmetic of a small win
Commission is easiest to ignore when the win is small, and that is exactly when it costs the most in proportion. Two illustrative trades, both before commission shown as a percentage of the winning amount:
| Net win before commission | At 2% | At 5% | What you keep at 5% |
|---|---|---|---|
| £1.00 | £0.02 | £0.05 | £0.95 |
| £10.00 | £0.20 | £0.50 | £9.50 |
| £100.00 | £2.00 | £5.00 | £95.00 |
| £1,000.00 | £20.00 | £50.00 | £950.00 |
The percentages look small in isolation. Over a large number of markets they compound against you in the same way any repeated cost does, and they are charged on top of the spread you already crossed to get in.
When the rate matters most
Two things make the commission rate unusually important on an exchange compared with a sportsbook margin: it applies to the net result of a market, and it applies to trading activity that never had a sporting opinion behind it.
Commission is the visible charge. The spread between the best back and best lay price is the invisible one, and on a market traded twice it is often the larger of the two.
If you want a general sense of cost per activity rather than per win, compare what one round trip costs you — the spread plus commission on the net result — against the edge you believe you have on the market. Reducing the rate without reducing the spread does not help much.
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