The Betting Exchange

By | January 26, 2017

The Betting Exchange – The Betting Site That Revolutionised Gambling.

A Betting Exchange is a sports betting marketplace, where you can bet against other bettors. Here, the Betting Exchange company acts as an intermediary and matches your bet with another bettors’ corresponding bet.  Find out more about the Betting Exchanges here

In other words, you ‘exchange’ bets with other users.  As there are no bookmakers involved, the odds at the Betting Exchange are often of much better value.

The first Betting Exchanges were flutter.com and Betfair who merged in early 2000.  Betdaq is the trading name of Global Betting Exchange Alderney (GBEA).  GBEA was acquired by Ladbrokes PLC.  There are also other Betting Exchanges such as Smarkets, Cheeky Punters, Xmarks and MatchBook which all came into existence after the betting site Betfair.

How Do Betting Exchanges Work?

Back and Lay Betting Explained

There are two types of bet that can be places at a betting exchange – a back bet and a lay bet.

  • Back Bet – Predict a market to win during an event.
  • Lay Bet – Predict a market to lose during an event.

Let’s look at an example:

This is a horse race (the 1555 at Newton Abbot) that is available to bet on using the Smarkets Betting Exchange.

Betting Exchange - Back and Lay Betting Explained

If we want to Canicallyouback to win this race, we can place a ‘back’ bet at odds of 3.10.  This means that a £10 back bet will return £31.  Once this bet has been placed, the bet is then matched by someone else who thinks Canicallyouback will lose the race and is willing to Lay your bet at the price offered (in blue).

If Canicallyouback wins, the lay bettor will pay you £31. However, if Canicallyouback loses, you pay the lay bettor £10.

 

Betting Exchanges allow players to change their betting positions within a long term event.  Just think about it: changing strategies in the middle of a bet is allowed!

Since bet matching is the only significant process being done here, we eliminate the need for hardened positions required for the bookmaker-facilitated games.

Betting Exchanges give you the facility to trade on sporting events and lock-in a profit!  It allows you to take advantage of arbitrage situations e.g. backing a horse at 10.0 and then laying the same horse at 7.0 (assuming the price contracts) so as to ensure yourself a guaranteed profit regardless of the outcome of the race.

This is how traders make a full-time living on the sports betting exchanges.

The ability to lay bets at the betting exchange is the reason why matched betting is even possible!

 

Comparison Between The Betting Exchange & Bookmakers

Although Betting Exchanges and traditional bookmakers are similar, there are a few key differences.

Lay Betting

Betting Exchanges allow bettors to place Lay bets – effectively playing the role of the bookmaker.  Bookmakers don’t have this feature, however, they do offer markets such as double chance.

Business Model

Bookmakers make a profit using probability and more specifically, the overround.  Betting Exchanges work by charging a commission on winning bets.  Commission rates vary between each betting exchange but are usually between 2-5% with the exception of premium charges.

Odds

The odds available on the betting exchange are often far more desirable than the equivalent odds found at the bookmakers.  Exchange odds are expressed in decimal whilst bookmaker odds are generally expressed in fractional form (this can be changed).

Markets Available

The amount of markets available on the Exchange Betting Site are considerably less than those available at the bookmakers, especially accumulators.  Low key events will also have less liquidity on the Exchanges, so getting your bets matched may cause problems.

The Best Betting Exchange

Betfair

The most popular betting exchange around.  Betfair have the widest array of markets available including some accumulator bets (on high profile events).  Their markets also provide the highest liquidity so it’s easier to get bets matched.  They have a rate of 5% commission too for winnings.

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The Betting Exchange - A Complete Guide
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The Betting Exchange - A Complete Guide
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A Betting Exchange is a sports betting marketplace, where you can bet against other bettors. Here, the Betting Site company acts as an intermediary and matches your bet with another bettors' corresponding bet...
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The Matched Betting Site
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