On this page, we offer a detailed explanation of what betting exchange is and how it works. It was introduced almost two decades ago, and since then it has had an impact on the industry. It was believed that it would result in the demise of sportsbooks, but it seems that this prophecy did not come true. The reason for those beliefs is that betting exchange is not betting against the bookmaker. This is a type of betting in which punters bet against each other. It is also called peer to peer betting. It is popular in some regions. As a result, there are many betting exchange sites where you can enjoy this form of betting. Herein, we shall give you all the things you need to know about the term and how you should use it.
How it Works
It should be noted that the basic principle of betting exchange is very simple and easy to understand. It acts as the middleman, i.e. it connects people who have opposite bets; e.g. someone who says team A is going to win and another person that claims team A is going to lose.
The one that is betting for the player or team to lose is called the “layer”, and the one that is betting on the player or team to win is called the “backer”. The former acts as a bookmaker because they receive the backer’s money and they will pay it out if the selection is successful using the relevant odds.
What is the betting exchange’s role here? It handles the money of the two parties. When the wagers are agreed, the betting exchange receives the layer’s prospective payout and the backer’s stake. If the bet wins, the backer is refunded their stake, and they also receive the layer’s payout. And if the bet loses, the betting exchange returns the potential payout to the layer who also gets the stake of the backer.
So, now you might be wondering, what does the betting exchange win by being the middleman between the layer and the backer? There is a small commission that is taken from both parties. This is how the betting exchange makes their money.
Sites for Betting Exchange
Now, you might be wondering where you can find a betting exchange. The truth is that this form of betting is available online just like bookmakers. It comes in the form of sites where one has to open an account and make a deposit.
There are many sports and markets available to bet on. You have to select a market and choose whether you want to lay or back. It works the same as a betting site; the only difference is that with betting exchange websites it is another punter that handles the bets and money rather than a sportsbook. And there is also one more difference.
When you make wagers at a bookmaker, you need to agree with the odds that they offer. When it comes to a betting exchange, though, you are free to suggest odds to your liking, and if they are approved by the layer, the bet is agreed. At the same time, if you find a layer’s proposed odds to be satisfactory, you can accept an existing bet. The same options are available if you want to be a layer. You are at liberty to choose your own odds. If a backer likes your terms and accepts the set odds, a bet will be agreed. It is very simple and straightforward.
Advantages of Betting Exchanges
Above we answered the question, “What is a betting exchange?” Now, we want to focus on the main pros and cons of this form of betting. We shall start with the advantages. There are two main benefits to point out. The first one is the odds. You can find better odds at betting exchanges than at sportsbooks. And that could make a world of difference to your long-term profits.
Now, the most obvious plus of betting exchange is that you can back a selection to lose rather than to win. This gives you a couple more opportunities for making a profit. As you know, this option is not available with sportsbooks.
For instance, let us assume you want to place a wager on a tennis tournament. So, you have chosen three players who you think have the biggest chances of winning, but you cannot make up your mind as to who is more likely to win. When it comes to betting at a bookmaker, you can wager on the three players. However, in the end, two of your wagers will lose, and only one will be successful.
But with regard betting exchanges, you have the opportunity to lay other players (bet on them to lose). Hence, all your wagers will be successful if one of your selections wins.
There are other situations in which betting exchange can come in handy. Truth be told, it is easier to choose a selection that will lose than to pick the winner. And it involves less risk. Of course, betting exchange bears some risk as well, but you should be able to strike successful selections most of the time, which will help you make a profit.
The best part is, you can manage the risk. For instance, let us imagine you want to wager on a team at the start of the new Super Bowl season and they have odds of 15.00. We assume that they are able to go to the payoffs. At that point, their odds will be lower. So, what you can do is lay them and guarantee yourself a profit no matter what the result is likely to be.
|Loss/Profit If Team Loose||Loss/Profit If Team Win|
|Laid £150 on Team at odds of 8.00||+ £150||– £1050|
|Backed £100 on Team at odds of 15.00||– £100||+ £1400|
As you can see from the above example, you have eliminated all of the risks of your initial bet and generated a profit. Of course, the payout could have been much bigger than that, but we have reiterated that sometimes the most reasonable thing to do is to sacrifice some of your potential profits in order to avoid the risk of losing huge amounts of money.
When it comes to the disadvantages, there are two minor drawbacks to consider. The first one is that there are very few rewards and bonuses on betting exchange websites and oftentimes they are not as generous as those at online bookmakers. The second disadvantage is that you may not be able to get your wagers matched all of the time. It depends on which market you are betting. If you go with less popular sports, you may struggle to find a match. However, this should not be a concern every time.
Betting exchanges are not for everyone, this is why we prepared articles for all types of gambling.
Types of Betting
- Arbitrage Betting Explained
- How Hedging Bets Work
- Kelly Criterion Betting Strategy
- Moneyline Betting in Sports
- Parlay Betting Explained
- All about Point Spread Betting
- Meaning of Over Under Betting
- Understanding Outright Bets
- What Prop Bets are About
- Explaining a Bet Accumulator
- Making Betting Permutations
- Betfair Sees Positive Trends in Betting Exchange’s First Year (Some Encouraging Trends for the Betting Industry)
- Hedge Fund Sees 30% Gain by Betting Only on Tomorrow (Runestone Capital Invests in One-Day U.S. Volatility)