A betting exchange is a platform for peer to peer gambling, that means punter to punter and not punter to bookie. The best betting exchange by far is betfair. Now they have two platforms a basic sportsbook and an exchange, both for staking bets – it’s just betting, so don’t get put off by the thought of it being complicated, it’s just another form of gambling.
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Exchange betting is a punter to punter lead process, where instead of betting with a bookie, your bet is actually taken on by another members of the exchange community. Therefore, theoretically you can have a bet with your friend, where he or she puts up the cash that you can win should your bet be successful. In this scenario you are backing a bet and your friend is laying the bet.
The exchange is the portal in which these bets take place, so on one side of this process you have all the punters who chose to ‘back’ the bet and on the other side are punters who refute the bet and chose to ‘lay’ it.
Here’s an example: Man Utd play Luton in the FA Cup. They are so likely to win, that the market suggests they are 1/10 odds. If you’re not familiar with odds, that means you will need to deposit £10 into a pot in order to bet on Man Utd winning to get only £1 back (plus your tenner, minus commission).
If you think man utd may lose or draw, you can lay that win market. That means that you can put £1 into the pot in order to claim the other person’s £10 if man utd do not win. An exchange process is available on most markets and Man Utd to win is a single market. To lay that market you are simply suggesting that Man Utd will not win that match, so it may be a draw or they lose and you will have successfully layed that bet. A betting exchange is imperative if your arbitrage betting, so you’re looking for a range of odds and frequent changes to create your arb betting scenario and lay your bet.
First up, let’s establish if you are betting or laying. Betting you are backing the result, laying you are refuting the result. Let’s assume you are betting, the difference in sportsbook betting is that your bet is taken on by the bookie and in 99.99% of the time it is accepted and placed.
On an exchange you are betting with members of the public who are not linked to the main operator. So on the betfair exchange for example, you are NOT betting with betfair. For a bet to be placed on an exchange, enough people need to have layed your chosen result for there to be money in the pot available should you win. Once there is enough money in the lay pot to cover your bet, it is placed. This is called matched, therefore your wager is placed and your bet is matched.
On betfair, your bet can sometimes stay in a state of pending until the pot builds up enough to match your bet. They have alerts, options & settings available for you to decide how the matching system works for you, how long to leave it pending etc. This is not ‘Matched Betting’ which is scheme cooked up by savvy gamblers using the exchange to profit from bonus promotions.
You can’t lay bets on a sportsbook, so you can’t pick a horse to lose a win bet, or you can’t pick Man Utd to lose against Luton from our earlier example. There are ways of achieving a similar circumstance like a Luton Draw or Win bet, but that is still considered a win bet… you have not layed Man Utd in this scenario.
A bookmaker is a single person or company willing to take your 1 bet, providing you odds and paying you out if your bet wins. On exchange as it happens you may actually have hundreds of bookies and/or members of the public contributing to the pot. So in principle the exchange is simply providing the software for bookies to operate if they choose on mass, without having to set up their own service. You don’t actually know who’s paid the money in, when you win through an exchange, it’s simply a big pot of money.
Owing to the fact that lost of bookies turned to exchanges to run parts of their bookmaking businesses, the gambling commission created a new digital gambling license for those profiting from operating on an exchange to a professional capacity. So be prepared, if you intend to make your millions laying peoples bets on the betfair exchange (effectively being a bookie) the gambling commission might chose to investigate your activity. If you start making a steady & regular income (in the thousands), you could be seen to be running as a business.
Quite simply it’s betfair, whilst there are other exchange companies on the market, the principle relies on the community of punters willing to back and lay bets that contribute towards the pots of cash available as winnings. Without that massive community, you might struggle to get your bets matched. So with that in mind Betfair being by fair the biggest community is our recommendation – don’t even bother looking elsewhere!
Yes it does, you’re not betting with the operator so they need to make a fee for the luxury of you using their software. They normally take a commission upon the completion of a wager. So if your bet wins and pays out, they normally take a small cut as a commission.
Trading on the exchange is simply a term used to highlight how a market is doing on the exchange as opposed to trackside with bookies or an online sportsbook. If you ever watch ITV horse racing (or Channel 4 racing before that), you might hear a presenter suggest that the price (odds) of a horse are trading better on the exchanges than with the touts. That’s mainly because information travels differently online and often the exchange is the first to react in moving prices. So much so that nowadays, the exchange like betfair is the focal point for all other bookies when pricing up their own markets.