What Are Betting Exchanges?

People have been betting peer-to-peer since long before even the invention of money. Originally, the bartering method was the way to pay off bets and other debts. The bookmaker is a relatively recent innovation in the world of betting, showing up fewer than 200 years ago. However, the advent of the betting exchange has allowed people to go back to one-on-one betting, primarily through the World Wide Web.

Back in 2000, the British site Flutter.com allowed punters to find one another online and start betting. Betfair was the next site, initially referring to itself as “open market” wagering before calling it a betting exchange. Before long, Betfair had bought up Flutter to emerge as the premier site in that new industry. Read our Betfair Review to find out more about the world’s leading betting exchange.

Betting exchanges work similarly to sports books in that they permit bettors to place bets on different events. However, the exchanges do not establish odds, which is just one of the many important differences. Also, the exchange does not take on any risk, they make profit instead from a nominal commission on the net winnings of each customer, no matter what the event.

This commission is what the winner pays for the matchmaking service and for the guarantee of payment. The exchange finds bettors on both sides of a particular wager (backer and a layer) and holds the funds in escrow until your bet is settled. Once the result is known, the exchange issues the funds to the winner (less the commission).

One of the most popular elements of the betting exchange is the chance to use lay betting on a variety of events. In traditional bets, it is only possible to wager on an event’s occurrence, such as a side winning a match or an individual prevailing at a tournament. Laying involves betting on something not happening, such as a particular tennis player not making it to the quarterfinals, or the favorites in a football match not winning. All it takes for the wager to take place is another member who is willing to back the bet at the same odds and take the other end of it. This creates a totally free market for bettors to peruse as they consider their bets.

If you are an experienced handicapper, you can use an exchange like this to set your own line. The exchange itself makes absolutely no input as far as spreads or odds, meaning that it is up to the members to make their own decisions. Let’s say that a bettor would like to get 5/1 odds on Kidderminster Harriers winning the Football Conference and permit as much as £500 in wagers. The exchange can set those preferences up precisely. Another bettor might come along and offer that bet at 9/2, while another might set it at 8/1. The exchange posts all of those betting opportunities, but every bet requires both a backer and a layer using the same odds before it can be accepted (matched).

One difference among some of the betting exchanges is that some use European decimal odds. The exchanges that use the decimal system set themselves apart from most online bookies who use U.K. fractional odds. However, both normally offer a toggle system that allows bettors to select the format that is most suited to them.

“Live” betting, also known as in-play betting, is a popular feature of the betting exchange. It is possible to wager on many different elements within an event or game, such as which player will suffer the next service break, whether a golfer will put his next drive in the fairway, or which side will force the next corner kick. Betting exchanges make it possible to run many of these in the same event, if you have someone to take the other side of the bet.

Betting exchanges are here to stay as an exciting way for bettors to engage in sporting events in a variety of ways. Not only are the exchanges popular for individual bettors, but there are also traders in the exchanges who use them to hedge big bets and balance ongoing action for bookmakers, as well as offering odds that can be 20% better on the exchange than they are on the larger sports books. With no betting limits, the sky is the limit for the amount of money you can take home. Of course, with all betting the reverse is also true: your losses are unlimited. For the savvy bettor, though, the exchange is a way to put your own wiles to work.


Betfair Review

Betfair Review

Multi-award winning Betfair offer so much more than the average Bookmaker - better odds, 'Cash Out' too protect against a potential loss, huge range of markets on wide variety of sports and a matched free bet up to £50 for new customers. (Full Review)



Irish based online betting exchange BETDAQ offer an alternative to Betfair with lower commission charges of just 3% on winning bets, competitive odds and for the low stakes punter they allow a minimum bet of just 50p compared to £2 minimum at Betfair (Full Review)