Commission-adjusted EV explained for betting

In one sentence

Commission-adjusted EV is expected value worked out using the odds you really receive once Betfair has taken its commission from your winnings.

How it works

On the Betfair Exchange you pay 2% commission on your net winnings in each market. You never pay it on losing markets. That means commission shrinks only the profit part of your odds, not the stake.

The easy fix is to convert the price into effective odds before doing any EV sums. A back at 2.20 with 2% commission pays like a back at 2.176. The break-even win chance rises to match.

Small edges are hit hardest. A back at 2.00 that looks 1% positive is exactly break-even after 2% commission.

The maths

O_{\text{eff}} = 1 + (O - 1)(1 - c)

\text{EV per unit staked} = p \times O_{\text{eff}} - 1

p_{\text{breakeven}} = \frac{1}{O_{\text{eff}}}

O: the decimal odds matched.
c: the commission rate on net winnings, here 0.02.
O eff: the effective odds after commission.
p: your estimate of the true win probability.
p breakeven: the win chance you need just to stand still.

In plain English: take commission off the profit part of the odds, then run the usual EV sum with the smaller price.

Worked betting example

Football on Betfair. You back Over 2.5 goals at 2.20. Your model says 47%.

No commission: EV = 0.47 × 2.20 − 1 = +3.40%. Break-even 45.45%.
At 2% commission: effective odds = 1 + 1.20 × 0.98 = 2.176. EV = 0.47 × 2.176 − 1 = +2.27%. Break-even 45.96%.

At 2% commission, about a third of the original edge has gone. On £100 of stakes the expected profit drops from £3.40 to £2.27.

Commission is charged on net winnings per market, not per bet. If you back two scorelines in a Correct Score market and one wins, you only pay commission on the market's overall profit. This matters for dutching and hedging, where some bets in the same market lose.

Where it's good

Every exchange bet: it is the correct version of EV on Betfair.
Setting minimum acceptable prices for automated strategies.
Comparing an exchange price with a bookmaker price that has no commission.
Deciding whether small-edge, high-volume trading can survive costs.
Feeding Kelly staking, which needs the true net odds.

Limitations and pitfalls

Use your own rate. Every sum here uses 2%; if yours is different, redo them.
Market-level netting means a bet's true commission depends on your other bets in the same market.
EV still depends on your probability; commission adjustment cannot rescue a bad estimate.
Favourites suffer most: at short odds a small commission takes a large share of a thin edge.

How to build it

A simple Python function or spreadsheet column for effective odds; pandas across your bet history.
Data: matched odds, stakes, market IDs (to net by market) and your commission rate at the time.
Practical tip: store EV both before and after commission in your bet log. Strategies that only work before commission are a common and expensive surprise.

Expected value: the basic version without commission.
Implied probability: break-even chance is the implied probability of effective odds.
Closing line value: measure CLV after commission too.
Back-lay hedging: commission on green-ups.
Kelly criterion: uses net odds to size stakes.