What Is a Betting Exchange?by Steven Hubbard
The first betting exchange was set up by Betfair in June 2000. They do not accept bets per se but instead match backers with layers while taking a commission (5%) on the winning bets.
Backers- The same as placing a bet at a regular bookie. Simply, backing an outcome you think will occur.
Layers- Simply, betting on a selection to lose or not occur. A bookie would usually “lay” your bet so you are pretty much acting as the bookmaker.
For example, if someone thinks Man City will win the Premier League, they may back that selection. A bookie offering this bet would be laying (betting against) this outcome.
On a betting exchange, you can either back Man City or lay against them. If Man City win, the backer wins depending on the stake and odds agreed. If Man City do not win, the layer wins the backer’s stake.
With exchanges, you only need to find another member willing to take a risk on the odds (lay your bet) for it to work. Every bet placed requires a backer and a layer.
Exchanges display odds in decimal format, check our odds guide for further information.
Betting Exchange vs Bookmakers
What are the differences between a betting exchange and a bookmaker and which one is better? Well, both have there pros and cons depending on your betting style and overall goal.
- Better odds- At a betting exchange, you will always get better odds than bookmakers. This is because exchanges make money from a small commission (usually 2-5%) of your winnings. Instead of relying upon betting margins like bookmakers in which they price markets in their favour, with “unfair” odds.
- Guarantee profit- If you play your cards right you can trade the market to guarantee a profit. If you lay a bet at a shorter price than what you backed at or vice versa. You can get a guaranteed profit irrespective of the outcome.
- Back and Lay- You can both back and lay outcomes instead of just backing at a bookmaker. This gives you the option to trade and find value allowing for more choice and variety.
- Creating your odds- You have the opportunity to set the odds you want. If they are reasonable enough, another member can match you.
- No limits- The amount you can bet is determined by the amount available (liquidity) in a set market. For popular markets, you will have no problem placing big money bets. But, for the smaller markets, it can be harder.
- No account limitations- Bookies can close your accounts or severely limit your betting ability if they deem you to be a “profitable bettor”. They do not need to provide any reasoning either. With a betting exchange, your accounts will never close for winning money. But, you may have to pay a higher commission fee if you perform well enough.
- Depth in markets- You can find hundreds of different betting markets at the best bookies. Especially unique new markets like “Bet Builders”, “Request a Bet” and more.
- Welcome bonuses/promotions- You can find a few promotions on the Betfair exchange but they are limited. Yet, the best-betting sites are full of great promotions.
- Less complicated- Bookmakers will simply offer select odds on events and markets. You can accept their odds or look for better value. Simple as that.
- Variety- At the moment you only have a handful of betting exchanges with Betfair dominating at the top. With bookmakers, there are hundreds to choose from and at least 20 high-quality bookies.
- Multiples- If you enjoy playing any kind of multiple bets, from doubles up to 10 team acca’s, you will have to use a bookie. This may not be the best way to win money but it sure is fun.
- Live Streaming- The best betting sites now offer a live streaming service for free. A live stream is key for in-play betting and enjoying sport in general. You can watch streams on your desktop, or the go with your phone or tablet.
Overall, it completely depends on your needs as a punter. As a casual gambler, you may enjoy placing multiples or betting on obscure markets, making bookmakers perfect for you.
If you gamble with high stakes on the popular markets and worry about account limitations, betting exchanges are perfect for you.
If you are unsure or lie somewhere in between. Give them both a try and work out what’s best for you. There is no right or wrong, just merely preference.