How betting exchanges work
Betting exchanges provide a platform for punters to bet against each other.
Punters can bet in a number of different ways on a betting exchange:
- They can bet for or against any selection in any betting market. In other words they can place both back and lay bets.
- They can set their own odds on any selection, with the intention of getting other exchange users to place bets at these odds.
The betting exchange does not intervene in this process. Instead it focuses on managing the exchange, ensuring it runs smoothly and managing the financial transactions between punters. In return for delivering this service, the exchange takes a small commission on every betting transaction.
Exchange betting pros and cons
Betting exchanges offer a number of benefits for users, including:
- consistently higher odds; this is because no bookie profit margins are built into prices and because exchange systems encourage users to compete to offer the best odds
- the ability to place lay bets, which are bets against specific outcomes in sports events
- the option of attempting to secure more favourable prices in back betting markets
- the opportunity to lock in profits or reduce losses through trading - a strategy that involves backing and laying the same selection in a betting market.
There are also some disadvantages, or factors that may discourage punters from using a betting exchange.
First, exchange betting is more complex than fixed odds betting. Along with a more complex user interface, there is a steep learning curve involved in placing lay bets and set odds.
Also, exchanges don't offer as big a variety of betting markets, or cover as many sports and sports events, as fixed odds bookmakers. Instead they mostly focus on events guaranteed to generate high levels of user activity.
What are the best betting exchanges?
The biggest betting exchange by far, and the most popular, is Betfair. Second in line, with a 7% market share, is BETDAQ, which was acquired by Ladbrokes in February 2013 and is now offered as the Ladbrokes Exchange.
Both offer professional, reliable services and a huge range of markets. There are other betting exchanges. However, few have the volume or liquidity needed to ensure attractive odds for a wide range of markets.
- Betting exchanges have opened up a new world of opportunities for savvy punters.
- An introduction to lay betting – what it is, the pros and cons and links to important lay betting strategies.
- The ins and outs of lay betting on horses. What should you consider to maximise your profits?
- Did you know? Betting that the favourite won't win a race is actually the smart option.