Online Betting Exchanges

Backing in Betting Exchangesbetfair betting exchange

Laying in Betting Exchanges

Advantages of Betting Exchanges

Disadvantages of Betting Exchanges

Betting Exchanges for Football Betting

 

Betting Exchanges Explained

Unlike a traditional bookmaker online like be365, William Hill, BetVictor, Paddy Power etc, a betting exchange is a platform that allows users to place bets with one another. In a betting exchange you are betting against other people’s money, and the exchange makes money by charging users a small commission percentage on the winnings made.

The term “Betting exchange“ was coined due to a similarity with the stock exchange. In a traditional bookmaker, the traders would decide what the prices are, in an exchange like Betfair Exchange the individuals who are betting do.

A betting exchange acts as an agent to allow individuals to place bets with one another, charging a commission for its services. Punters can therefore assume the position of the bookmaker and offer odds on events, as well as betting like at traditional bookies.

Backing

betfair backing betWhen you “back” a selection, you are betting that it will win. This is just like betting with a conventional bookmaker.

Choosing your odds:
The way one places bets is changed slightly from the traditional way. A punter is able to request odds on markets, as well as placing bets on odds offered immediately. If a punter wants better odds than are currently available in the betting exchange, they can request odds on a bet in the exchange and see if anyone would like to match the bet. The closer a punters requested odds are to the current trading price, the increased chance of the bet being matched. If a bet is not matched before the beginning of the event/match, the bet will be void and the stake retuned to you.

For Example:
Greece v Liechtenstein friendly Football Match in Athens 
Odds on Greece to beat Liechtenstein are 1.05 to back and 1.06 to lay
You could bet at 1.05 immediately

Or, you could offer to bet at 1.10 or 1.15 or 1.20 and hope that someone will match the bet.
The higher the odds you request the less likely that the bet will be matched. Punters looking to Lay Greece will take ALL the lowest odds requested first.

Laying

Laying is simply betting on something not to happen.betfair lay bet

For example: Football match between England v Poland 

A gambler can “Lay“ England, or bet against them to win the match (so you win your bet if Poland win or the match is a draw).

In an exchange like Betfair, you can see what the price is currently trading at, and decide whether you want to lay the price and have your bet matched instantly, or you can offer your preferred odds, and then hope that a “Backer” will want to match your bet at those odds. If by the start the particular event, or at the end of the event (if betting in-play), and your requested odds are not matched, the bet is Void and stake returned to your account.

For Example:
England v Poland, World Cup Qualifier  
Rather than betting on England, a punter could lay (bet against) Poland, so if England win or the match is a draw, the punter would win.

Odds are England are 1.25 to back (win) and 1.26 to lay (not to win)
The punter does not want to risk an unmatched bet, so the punter lays £100 at the availible price of 1.26.

This means that another punter on the exchange is betting on England at 1.26, and if England win (the punters bet loses), they will have to pay out £26.

If Poland wins or the match is a draw, the punter wins £100.

Advantages

Odds:
The odds available with a betting exchange can sometimes be 20 per cent better than those offered by traditional bookmakers. Bookmakers need to factor in a profit on every book that they make in order to cover their overheads and to make a profit. Since you are betting against an individual on a betting exchange, this does not apply. The odds are decided by what other people are prepared to risk. For instance, since an exchange they are only betting on one horse, they do not need to make a profit on all horses running, as a bookie has to.

Market information:
Exchanges, especially Betfair, are renowned for providing information about events that is not publicly available through market moves. For example, horses that drift rapidly on Betfair rarely perform well, similarly if a horse is back very well in Betfair, it is likely to run well. This market warning signs, information on the events is valuable for punters.

As an extra dimension, exchanges very often offer punters the possibility to bet “In-Play” or “In-Running” on an abundance of televised events.

Disadvantages

Odds:
Odds are not necessarily better on betting exchanges than at traditional bookmakers. Most short priced selections are normally the same odds on an exchange as they are on most bookmakers, sometimes worse. Bigger price selections, on odds of 10.0 and over, punters can often benefit from bigger prices that what is being offered by traditional bookmakers. You can see this example on most UK Horse races on Betfair

Liquidity:
A betting exchange is reliant on “liquidity“ and users tend to focus on markets can be matched.
Big Bets cannot always be placed. Bets are limited to the stakes of the players betting. A traditional bookmaker is able to take most high stake bets but with a betting exchange you limited by what the other players want to bet.

This tends to be a problem on the less popular betting types and events. When a punter looks at the market, you can see the amount that is offered at particular odds underneath.

For example, you may see odds for Arsenal at 2.5, but the amount of money available at 2.5 is only £10. The next best available price is 2.45, where there is £1,500 available. So if you wanted to bet £100 on Arsenal you could only match £10 at odds of 2.5 and £90 at 2.45.

Unmatched bets:
Keeping tabs on all the unmatched bets that a punter may place if often problematic. Punters also need to react to changes in circumstances, like non-runners in horse racing, or player injuries in football. Some markets offer automated cancellations to protect the punters from this, in particular any pre event market will be closed at the off and all bets cancelled and a new market potentially started for in-running betting.

Commission:
An exchange makes money from charging commission on every winning bet. This normally starts at 5% on winnings. These commission rates decrease dependant on the number of bets a punter places with the exchange. It can therefore be hard to calculate what the real odds a punter receives from a betting exchange once commission is applied.

Example:
A punter bets £100 at 5.0, with a return of £500 prior to commission.
If there is a 5% commission applied on the winnings of £400, so £20 commission is deducted from the £500 return leaving £480.

Betting Exchanges for Football Betting

A betting exchange is a vital tool for any sports betting punter. The ability for trading and hedging from the betting exchange ability to lay is invaluable resource. However, the use of traditional bookmakers is not redundant, as betting exchanges like Betfair and Betdaq, often have less liquidity and worse odds on obscure sports markets, betting types (like Asian Handicaps and multiples), and in-play offering. Also, bookmakers do not charge commission on winnings and once this is taken into consideration, the odds on the main/favorites are not necessarily better. If however, a punter/user was to only have one single betting account, a betting exchange would be a good choice.

We have also seen many changed to the Betting Exchange landscape recently, with Ladbrokes purchasing Betdaq and Betfair investing heavily into a fixed odds product, as they are not making enough money from the exchange.

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