Betting Exchange Explained – The Ultimate Guide for Dummies

Betting exchanges have managed to attract a significant number of people lately, becoming a viable alternative to the traditional bookmakers. What makes them special is the opportunity they provide to the user to become the bookmaker by establishing personal odds (laying), or the regular player (backing) by embracing the odds established by another exchange user.

This article aims to be a guide in the betting exchange world, so people can take the best decisions when investing their hard earned money in this kind of activity.

Betting exchange explained

The betting exchange market works on a peer-to-peer system. This means that players basically compete against each other, and not against a bookmaker. The profit is linked to privileged knowledge and handicapping skills, especially when dealing with mature markets.

Opening markets, on the other hand, tend to be less efficient due to the low number of liquidities and players. This means that early bettors can be either rewarded or punished regardless if they are laying or backing.

Betting on exchanges may seem complicated but once you get the hang of it, it’s Peanuts

How does a betting exchange work?

In order to make things even more comprehensive, here is an accurate example of how the betting exchange market goes. We are going to rely on the assumptions that there are two bettors, X and Y, who place wagers on a match where Chelsea meets Manchester United.

Player X believes that Manchester United is more powerful and will beat Chelsea. As a result, he gives the Blues 4.00 odds for a win. The risks, in this scenario, is £3 for a £1 against his bet. Player Y believes the opposite and bets £1 at 4.00

As there is a similarity between the two bets they are matched, with two possible results. If Chelsea turns out to be the winner, Player Y achieves a profit of £3. If Manchester United beats Chelsea, Player X wins £1.

Back bets and lay bets

The betting exchange market is very versatile, and this makes it incredibly appealing. The odds are displayed in a decimal format, making them easy to read.

A back bet is similar to the wagers you place at regular bookmakers. The detail that makes  a difference is the fact that people can choose the odds they desire. A lay bet means acting as a bookmaker and predicting something that is not going to happen. In this case, the idea is to lay as low as you can.

This means that a player who decides to place a bet can check the odds displayed and decide whether to back or to lay. If the odds are 2.12 to back and 2.18 to lay, the player can either go for 2.12, or queue for odds like 2.14, or 2.16. However, if the odds proposed are not accepted, the bet becomes void. 

People go for the lowest odds possible

Top 3 reliable sites 

Accessibility is a priority nowadays and the possibility to bet from home or on the move is crucial. Fortunately, there are certain betting exchange sites that people can rely on as they are safe and trustworthy:

Betfair is a renowned name in the betting exchange market. It is a pioneer in this domain as it introduced this type of services in 2000. Members can enjoy all kinds of markets and this makes it very versatile.

Matchbook is another great option. The site relies on the latest technology in this field and is focused on providing high-quality services. Furthermore, it grants access to profitable bonuses.

Betdaq is another reliable site people can pick. Though they are not as big as the previous two, they do provide quality services and are on a continuous expansion.

Betting exchange vs. regular bookmaker – How do the odds compare?

The main quality of betting exchange markets that differentiate them from traditional bookmakers is represented by the odds. The downside is the 5% commission applied on winning bets. There is also the possibility to make money even before the event starts, through trading.

To make things even more comprehensive, we can take for example the table bellow that refers to horse racing betting. The last two columns marked in orange are the odds proposed by betting exchange sites while the rest by traditional bookmakers.

table-bookmakers-exchange-markets (1)

Trading Strategies for Betting Exchange

Betting exchange needs to be approached just like any type of wagering in order to achieve successful results. The best strategy that applies to all markets is to keep track of your trades. Maintaining your discipline will help you prevent overspending and ruining your bankroll.

This means that a trading diary can make the difference between a lucky trader and a smart one. Recording the successes and losses can help players develop strategies that can lead to optimum results.