How Betting Exchanges Work

The vast majority of sports betting fans have all heard of bookmakers, and most are familiar with how they work, however when a betting exchange is mentioned, often they are left intrigued, and wary of them and how they work. However, they are significantly better for punters than a bookmaker.

If we were to summarise a betting exchange, quite simply it is a market place which people come to, and bet against each other, and even themselves, on various sporting events, the same events as a bookmaker would offer in fact!

However, the key difference is, when you place a bet with a bookmaker, you are betting against the bookmaker, meaning if you lose, your money becomes theirs. If you bet at a betting exchange, you are betting against each other, meaning if your bet loses, it isn’t the betting exchange that gains your cash; it is another person, no different to yourself.

The betting exchange makes their money via a small commission percentage (usually 5%) on winning bets, and for that reason, you will never find yourself getting limited as to how much you can bet or win, in fact, betting exchanges actually encourage winning, and will offer many tools to help you do so.

The best way to think of the exchange and how the process works is, you’re sat in a pub, and you’re making a bet between yourself and a friend, with a middle man holding onto the money, until the winner is decided. The betting exchange works in the same way, as the middle man, who holds onto the money, and pays the winner when the event is settled, and keeps a modest percentage for them for facilitating this.

So, how does it really work?

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The betting exchange offers a list of markets, you decide if you wish the back an outcome to happen, or lay against it, and choose your odds, and your stake. If you have backed an outcome at £20 at odds of 2.0, you now need somebody to lay against that same outcome, also at odds of 2.0, and if the person who laid against it wins, your £20 would pay them out, and if your back bet wins, then their money is used to pay you, and whoever wins, pays the commission.

Why are betting exchanges better than bookmakers?

A bookmaker strives to make a decent percentage or margin on each and every bet they offer, and this is reflected through the odds offered. Whereas, when you bet with a betting exchange, they aren’t a bookmaker fighting to make high margins; their money is made solely through commission.

The main markets where bookmaker’s odds may be cut to improve margin, are the “bread and butter” markets, such as football and horse racing. With a betting exchange, you’ll truly notice the better value they offer on these.

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Be a bookmaker, and a punter

A betting exchange offers you two styles of bet on an outcome. One of which is known as “Backing” which means betting for something to win, no different to how you would at a bookmaker. However, they also offer something known as “Laying” which means betting against an outcome, essentially betting for it to lose.

When you back a bet to win, you are basically playing the punter.

If you “Lay” against something, in the hope it loses, you’re essentially playing a bookmaker. The reason being is, if the event loses, you receive money, if it doesn’t then your money would pay out the winners, or the back bettor.

Trade outcomes for guaranteed profit

On regularly fluctuating markets such as horse racing, or correct score football markets, it is possible to both back and lay an outcome at different times, in order to secure a guaranteed profit, no matter what the outcome is. This is done by both laying an outcome first, and then backing at odds which were higher than your lay odds. Or, backing an outcome first, and then laying the same outcome at odds that are lower than your back odds.

The best event and time to do this, is a horse race, roughly ten minutes before the off!