A betting exchange allows members to bet against each other rather than a bookmaker. Customers can offer odds to, or request odds from, fellow bettors.
Where traditional bookmakers risk going head-to-head with gamblers on markets, a betting exchange takes on no risk at all. Instead, a betting exchange provides the platform for its customers to match bets against each other and takes a small commission on winnings.
Betting exchanges are becoming an increasingly integral part of the global gambling landscape, in many cases offering customers much better odds, more transparency, and an experience that feels intuitively fairer.
How does a Betting Exchange work?
The big difference with exchanges compared to bookmakers is they allow lay betting. This means backing a selection to lose rather than win.
Every bet placed on a betting exchange involves two bets really – one bet backing the selection to win, and a second bet backing the same selection to lose.
So if I want to place a £10 bet on a horse to win at 10/1 which returns a profit of £100, I need someone else to risk £100 at 1/10 to win £10.
This option to lay a bet makes it much easier for customers to guarantee a return if the odds shorten after they’ve placed their bet.
Where backing a horse with a bookmaker would require you to back every other horse in a race to “green up”, on a betting exchange you can back your selection to lose after the price has shortened to lock in a profit.
Why use a Betting Exchange?
There are many benefits to using an exchange instead of a bookmaker.
A betting exchange provides greater choice for punters. Before, if a bookie wasn’t willing to risk the odds or the stake you wanted, you simply couldn’t have your bet. With an exchange, you only need to find another member willing to take on the risk, or in other words to lay your bet. Betting exchanges allow users to find odds and markets they want.
Second, value for bettors will generally be better on an exchange. Bookmakers, in order to make a profit, do not offer the “true” odds on a selection, but rather take a fraction off the odds of an event happening in order to make money.
On an exchange, the market isn’t priced up by one person, but by hundreds or thousands of bets placed by others, and that means there is more pressure on layers to offer fairer prices, because if they don’t, they risk not getting their bets matched.
Exchanges also allow greater flexibility for bettors to trade their positions on markets than traditional bookmakers.
Like the stock market, the value of a bet can go up or down. Imagine the team you’ve bet on is winning, but they’ve just had a player sent off. Are you still as confident in them now as at kick off?
On an exchange, you can lay them to get your stake back and possibly some profit.
How have betting exchanges changed betting?
Betting exchanges have been central to the online betting revolution.
Betfair was the first betting site to allow bettors to place lay bets, and that move re-shaped the sports betting industry. Many common features of online betting today would not exist without the betting exchange model.
For example, though taken for granted today, in-play betting is a result of exchanges allowing members to offer prices throughout events, rather than bookies ceasing bets when an event starts.
Another popular online betting feature is cash out, and Betfair is the home of the Cash Out because it is an exchange. Customers on Betfair always had the opportunity to cash out on bets placed to guarantee profit or manage a loss.
To make the process simpler for customers, Betfair added the Cash Out button. This places the lay side of a bet to ensure the same profit whatever the result of an event. Bookies now offer cash out features directly as a result of Betfair’s innovative exchange model.
Betfair has also led in the mobile betting sphere, being the first online betting company to have their app available on the Apple store, and this commitment to mobile continues today. It’s never been easier to place your bets on the exchange thanks to the lay exchange mobile apps, where you can easily navigate between markets, stream events live on your phone, or explore Betfair’s virtual and casino games.