What Is a Betting Exchange?

The house always wins when you aren’t the one controlling the odds. But when your arsenal of betting options includes the ability to buy, sell, or trade outcomes, locking in a profit isn’t a far-fetched prospect. Enter betting exchanges. Right about now, those who are new to the betting scene are probably asking themselves: what is a betting exchange?

In a nutshell, a betting exchange is a marketplace where bettors can make wagers against each other instead of the bookie. The platforms charge a small commission fee while enabling the punters to back or lay their bets. Here’s everything you need to know.

10 Quick Facts About Betting Exchange

• Customers are backing and laying bets against each other.
• Participants either back or lay a bet.
• A punter who lays a bet is betting against the event result.
• Bettors who back a bet and lose pay the winners from their own pocket.
• Layers offer more reasonable prices since their bet needs to be matched.
• Betting exchange companies have nominal commission fees compared to bookmakers.
• Betting exchanges offer better odds than bookmaker betting sites.
• Customers cannot be banned by a betting exchange as the latter isn’t involved directly in bets.
• Accumulators are limited in type and number on betting exchanges.
• Betting exchanges don’t have the sort of promotions that are available with traditional bookmakers.

Difference Between a Betting Exchange and a Bookmaker

Variety is king when it comes to betting. The longer the list of possibilities and betting options, the better. An average punter should never stick exclusively to a single method like matched betting or shy away from betting exchanges because they come off as more complex than traditional betting sites.

The betting exchange market transformed the betting landscape in part because it gave more control over the odds to punters. When trying to understand how they operate, it’s important to remember that the key difference between a betting exchange and a bookmaker is that with the former, you’re betting against other punters. Instead of relying on the bookmaker’s odds and simply backing a bet, an exchange platform gives its customers the additional option of laying a bet.

Another important difference concerns the way in which betting exchange sites generate revenue. Unlike bookmakers, they only charge a small commission on winning bets. Bookies, by definition, make and pay out money risked on a particular result. They offer the odds, which includes their margin that can go up to 20%. It often makes for unfavorable odds for punters while carrying zero risks for bookmakers.

On the other hand, betting exchanges have better odds because players who lay bets are trying to entice others to back these wagers. It’s a peer-to-peer betting model where punters share the risk.

Compared to bookmakers that set up a bet on the result of an event and demand unfair odds, betting exchanges do not place bets. Of course, for most bettors, the betting exchange vs. bookmaker showdown ultimately comes down to how much money they can walk away with. The betting exchange fees are a percentage of estimated winnings that range between 2% and 5%.

It’s also important to note that betting exchanges don’t have bet limits. It’s more realistic to place a larger bet with betting exchanges because bookmakers tend to avoid high stakes. Similarly, there are no account closures or bet cancellations since betting exchanges are not participating in the betting process and have no interest in the outcome of the events.

Betting Exchange Explained

To understand how a betting exchange works, you need to know about lay betting and backing a bet. The latter is a traditional form of betting where you bet on an event happening at the odds you choose. Meanwhile, a lay bet is betting on a particular outcome not to happen.

Here’s an example of a football wager on an exchange. The fixture is between Liverpool F.C. and Leeds United, and you think that Liverpool won’t win the match. Once you access the sports betting exchange, you’ll notice two coloured columns with decimal odds under each outcome that you use to back or lay a bet.

Once you click on a column to lay a bet that Liverpool will lose, you type in the stake. This is the amount you’ll win if the event ends as you predicted. The stake also represents the amount you’d have to pay if Liverpool wins the match, and it’s an integral part of understanding how the betting exchange model works.

If Leeds United wins and your stake was £20, then you collect £20 since you’ve won the accepted stake. However, if Liverpool wins and the odds of your bet were 2/1, then you’d have to pay £40 to the back betting player.

This amount is also referred to as the liability. You can only receive the stake if you can financially cover your liability. It’s an important component on any of the most trusted online betting venues.

When you’re comfortable enough with betting exchanges and the charge for every bet, be sure to back your bet close to the market value. It guarantees that other players will accept to lay in bets. If other punters do not back up your bet, the bet is off.

Betting Exchange Shortcomings

There are a couple of things to keep in mind before you embrace betting exchanges. Since your bets depend on other players backing them, choose more popular sports. Betting on horse racing is fine, but  Gaelic games betting is hardly a lucrative investment. Less known sports and matches may not get picked up by the betting exchange features, resulting in a bet you backed and nobody showing up to lay that bet.

While bookmakers have unfair odds, they provide various promotional offers, such as welcome bonuses, deposit bonuses, better accumulators, and prize tournaments. Don’t expect these promotions on betting exchanges.

And while punters cannot be limited or banned by betting exchanges, the platforms faced criticism in the past about fuelling corruption and cheating in sports by allowing anonymous bettors to bet on an outcome not happening. That said, the exchanges are fully transparent and enable customers to monitor for any betting irregularities. The platforms have also cooperated with police investigations.

Conclusion

Betting exchanges have revolutionised the betting market. If you ever find yourself wondering what is a betting exchange useful for, just remember that in-play betting, mobile betting, and cash-out features all originated from these platforms. In many ways, betting exchanges leveled the betting playing field and made it easier to win a bet.