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Betting exchange

Betting Exchange

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What is a betting exchange?

Betting on Betting Exchanges is different from betting with your regular bookmaker in many ways. More often than not, you get better odds and you also have the option to lay a team. What makes this different from your standard online bookmaker, you bet against other bettors.

Betting Exchanges Explained – How they work

A betting exchange is based around a piece of software which is, in essence, very similar to the software used to calculate the stocks and share prices.

Over the years the software has been refined to incorporate almost every conceivable bet and outcome and as such offers the punter a degree of flexibility and freedom in their betting that had not been available previously.

When a new customer signs in with a betting exchange they deposit an initial sum of money into their account which is their money to bet with.

Unlike a traditional bookmaker where a punter makes a bet with the bookmaker, the betting exchange works by connecting a gambler with another gambler who has opposing views of the same event.

A bet is only accepted if it is “matched” by another customer having that opposing view and willing to make that bet.

Once a bet is made, the software searches through the markets for a customer willing to accept the bet you have made.


If a match is found, then the bet is made anonymously. The punter is not betting against the bookmaker, but against another punter who simply believes that the outcome of the sporting event will be different.

In addition to backing a horse or team to win, customers can also lay a horse or team to lose and accept bets on this from other punters.

If the horse or team wins then they have to pay the victorious punters what they are owed from their account, however if the horse or team does not win, then the punter who laid the bet will keep the stakes laid on it, in the same way that a bookmaker keeps the stakes of all losing bets.

Betting exchanges are free markets and punters are allowed to select the odds and prices which allows great scope to offer far better value in terms of prices as you would find at a bookmakers.

The odds are generally shown as decimals, although options are available on site to allow punters to view the odds in fractions if preferred.

Companies who run betting exchanges, such as Betfair, make their money from taking a commission of between 2% and 5% on all winning bets.

To summarise, a betting exchange works by linking gamblers who are willing to bet their money on possible outcomes of the same sporting event.

The software used not only helps find the best odds available, but links gamblers together to create the market and match bets together.

It then automates the payments between gamblers to ensure that all payments are made on time. The exchanges are flexible, fun and for some, highly profitable.

Advantages with betting on a Betting Exchange

A traditional gambler, or a novice, may well wonder what are the specific advantages to betting on a betting exchange, that a traditional bookmaker may not be able to offer? The truth is that there are a great many advantages to betting on a betting exchange over a traditional bookmaker and outlined below are just a few;
Better Odds : One of the most recognisable advantages on a betting exchange is that they tend to offer better odds than you will find with any bookmaker. On average, research has shown that a punter can receive 15% better odds in their favour using an online betting exchange such as Betfair and better odds mean more for your money!

Total Flexibility :  Not only can you back a selection, but you can also lay a selection, backing against the selection winning the bet. You can shop around the exchanges to find a market that you feel offers you the best value for money or you can set up your own exchange and set the odds you feel are right to attract punters to take the odds you are offering! You are only limited by how much you have in your account to cover these bets should they win!

Anonymity : Betting exchanges guarantee all their customers, whether they are backing or laying bets, complete anonymity so all customers never know the identity of the person they are backing or laying against.

Live Betting :  Not only can you now bet on horse races, soccer matches etc before they start, with the advent of live betting, it is now possible to back and lay bets during an event in response to the events happening live! This new and lucrative market for betting has really taken off over the past few years and much of that is down to the success of this form of betting on the exchanges.

Software :You can use software to help you place bets automatically on exchanges

This topic will be covered in further detail in a future article, but it is worth mentioning. I’d highly recommend MarketFeeder Pro as the software allows you to create your own betting strategy’s using Microsoft excel, and because it is officially registered with Betfair and Betdaq, you can do many things that standard exchange users cannot. For example, you can place bets for as little a 1 penny per race (as opposed to the minimum £2 bet you’d have to normally place) which is invaluable when you’re testing out various betting strategies. If you don’t have the knowledge or experience to set up strategies yourself, then it may be worth considering an automated software solution, such as Auto-Betfair.

Exchanges are happy when you win :Unlike traditional bookmakers who grow frustrated (and often suspicious!) of customers who continually win money, the exchanges are delighted when you win. Exchanges earn money by taking a very small commission from every winning bet. The beauty of this is that when two parties bet against each other, there is always going to be a winner! (As far as I’m concerned the guys behind Betfair and Betdaq are absolute geniuses!)

Quicker Price fluctuations :The odds offered by traditional bookmakers tend to change as quickly as exchanges. This rapid change on the exchange is vital in spotting the direction the odds are going. Using this information allows you to often secure arbitrages. (Please see my article on spotting arbitrage opportunities)

Ease of Use : Betting on an exchange such as Betfair, could not be simpler. The interface is easy to follow with all markets clearly identified and odds shown clearly. Searching the markets is simple to follow, making the whole experience enjoyable and easily understandable. All bets are matched by state of the art software from markets across the globe and all financial transactions are fully automated, ensuring prompt, almost immediate, payment.

While betting exchanges may differ slightly from traditional bookmakers, they offer a whole new avenue of opportunity for the punter, if used wisely, to turn his meagre stake, into a healthy profit.

In conclusion, it is nigh on impossible to beat the bookmaker, but earning money on the exchange is an entirely different matter when you consider the facts above.


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