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Betting exchanges

Betting exchanges have revolutionised the betting market particularly online betting. More and more people have been attracted away from bookmaker shops to use the latest betting exchange websites.  Betfair is the biggest and most popular betting exchange. Betfair is a global exchange. Citizens from the USA, and other countries like India are not able to use Betfair because online sports betting is illegal  (although the laws are starting to change in the USA). There is not enough space on this page to mention all betting exchanges, so, the focus will be on Betfair, which will be used to explain betting exchanges in general.  Later visitors can find links to more detailed sections about Betfair betting strategies. Use the table of contents underneath to get information on Betfair and betting exchanges quickly.  First, here is a list of online betting exchanges.

  • Betfair.  Currently the market leader and can not be beaten for number of users and amount of money in the market. Get started with Betfair by choosing one of their sign up bonuses.
  • Betdaq.  The only real contender to Betfair because they charge a lower commission amount of 3% and often offer no commission specials for horse racing.
  • WBX. Starting to gain market share but the exchange doesn’t have sufficient money moving around to support as many markets as Betfair.
  • Mansion.  No longer has any significant share of betting exchange punters.

What is a betting exchangeBetting exchanges compared to traditional bookmakers
Lay bettingBack and lay betting: when are bets matched?
How to make money on Betfair

What is a betting exchange?

Betting exchanges allow members to exchange bets. That’s the unique bit, members can trade bets, and the trading aspect is similar to a stock exchange. Participants buy and sell something, which in this case just happens to be a bet. The price is the odds of the bet. Flutter.com was the first to come up with the idea and Betfair.com took the idea and added bells and whistles.

The betting exchange website is powered by clever technology acting as a broker between members who want to offer their own odds (like a traditional bookmaker) or accept someone elses odds. If you back an event on a betting exchange, like with a normal bookmaker, you are accepting someone elses odds.

How do betting exchanges differ from fixed odds bookmakers?

One of the only major similarities between a betting exchange and a fixed odds bookmaker is that both promote fixed odds betting. However, the main similarities end there.

As mentioned previously a betting exchange is similar to a stock exchange. The commodity being traded is a fixed odds bet, rather than shares or stocks. The bets on a betting exchange are priced at fixed odds, but, the odds do move.

The concept is great because in practice it lets market forces take hold. As a result the odds are very competitively priced. The betting exchange completely ‘side tracks’ traditional bookmakers. Leaving just you, the exchange and the ‘other guy’….or gal, sorry ladies. Betting exchanges don’t act as a charity, they make their money by charging a percentage commission on the winnings.

One other point is that a betting exchange must have lots of active users and needs liquidity (money moving round the exchange). The same way a stock market needs to have people buying and selling shares. For example, some markets on Betfair.com have far more participants than others.

A disadvantage of  betting exchanges is some markets do not have high liquidity. As such it is not possible to bet with high stakes. Horse racing and football markets tend to have good liquidity. However, for really high stakes a normal bookmaker is the best place to bet.

Gamblers whose betting activities have traditionally been restricted by bookmakers (normally for winning too much money) have found betting exchanges to be a gold mine since they are now able to place fixed odds bets of a size unrestricted by the betting exchange – the only restriction is that one or more opposing customers need to be willing match their bets.

More recently betting exchanges like Betfair have developed a wide range of casino games. As you might expect they have the budget for some big prizes!

What is lay betting?

Betting exchanges offer the opportunity to lay outcomes, which is to bet that something will not happen. That a horse will lose or a football team will not score more than 2 goals. This is great for sports betting and there are many markets available.

The lay bet is the position normal bookmaker takes when offering a bet for somebody to make a bet. For example, if someone thinks Team A will win a competition, he may wish to back that selection. A fixed odds bookmaker offering the punter that bet would be laying that selection; the bookmaker wants to make money if they loose.

Put yourself into the bookmaker’s position. You want to win money if your horse or football team lose. You are offering odds on that event. Your odds have to tempt another member of the betting exchange to back that horse or football team.

To lay a bet the member simply enters the odds that they want to offer and sees if someone will match the bet.  Betfair facilitates the transaction by providing a user interface and betting exchange technology that a child can learn how to use.  Betfair or any other betting exchange will normal charge a commission for providing this service.

A lay bet is simply a prediction that the other selection or one of the other selections will prosper, weather it’s team in a golf championship, a football team, tennis player, or all the other horses in a horse race except the one laid.

A picture has been pinned below showing a section from Betfair.com to show how a Betfair lay bet would look.

betfair_lay_bet

Here you can see two columns. If you are backing a Ryder cup winner the odds available are on the left (decimal odds inside the boxes). The longest odds are closest to the centre. If you want to lay a position, you need to look at the columns on the right hand side in pink. If you click on a pink box for a Betfair lay bet, an area opens to the right of the fixed odds betting table. See below

betfair_lay_bet_slip

Here you choose the price you want to take, and how much you are prepared to risk. The shorter the price you wish to lay, the less money you have to risk compared to your potential reward. Laying the Tie in the market below at 13.5 might sound safe, but for every £10 you want to win, you have to risk £125 – high risk and low reward.

Without lay betting there would not be services like the one offered by the man shown in the top right of this page.  Using a clever legal loophole that only a betting exchange like Betfair can offer.  Check it out it is recommended by us!

Back and lay betting, how do the bets get matched?

Back and lay bets are matched around a market average. Betfair odds reflect how much money enters the market at the average matched odds in real time. If lots of money goes to back a selection the odds will decrease until there are less people backing and more people wanting to lay. The odds fluctuate depending on supply and demand. Bookmakers actually participate in the market in order to hedge the positions they take with sporting events. In general the odds on Betfair are up to 20% better than those with online bookmakers.

How to make money on Betfair?

Betting exchanges have revealed various ways of making money from exchange betting. Betfair has opened it’s application programmer interface or API to third party software developers.  Developers have created a range of Betfair software that had made Betfair bet trading possible.

Developers have produced a whole range of innovative features, indicators and tools to enhance exchange trading on Betfair. One example, is Bet Trader, Betfair trading software from Racing Traders, which has various clever features making Betfair trading possible.

Various betfair trading strategies exist making it possible to profit from Betfair betting. These include, types of sports arbitrage betting like scalping on Betfair and trading steamers and drifters on Betfair. Scalping is a type of sports bet trading designed to profit from small movements in odds over a short time frame. Whereas, betting on steamers and drifters works over longer time scales and involves a bigger move in the underlying odds.

Another strategy, horse lay betting on Betfair, involves laying horses to lose (or backing that a horse will lose) in order to produce consistent returns.

The best betting system reviewed on Lets Compare Bets would not be possible without Betfair.  Visit our review here.

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