Bookmaking on a Betting Exchange
Bookmaking, like dutching, uses bets placed simultaneously on multiple selections to eliminate the unlikely outcomes and divide the locked in profit between the remaining selections. Unlike dutching, however where you are backing your selections, with bookmaking you lay the selections.
Although dutching can be done with bookmakers and betting exchanges, bookmaking can only be done on a betting exchange. This is because only betting exchanges offers lay bets.
With bookmaking, you only place bets on the outcomes that are the least likely to happen. By excluding the most probable outcomes and placing lay bets on the least probable, you make a profit, splitting it among the remaining selections.
For example, in a horse race, you would choose the horses that are the least likely to win the race and place lay bets on these horses. You would then use a bookmaking calculator to work out how to split you stake amongst your selections thus guaranteeing an equal profit if none of those horses win the race.
The underlying concept is similar to that of dutching, and bookmaking can be thought of as being dutching in reverse.
Bookmaking, like dutching, is mostly used in horse racing markets, and they can be applied in both in-play and pre-race markets. Bookmaking is also used in other markets such as the correct score for football games.
You can also use betting software such as Traderline to automate the bookmaking process as much as possible. (You will after the free trial expires have to factor in the cost of using such software however.)
Traderline has a practice mode that you can toggle on and off, in which you can try out all of your strategies with no risk of losing money. The software currently only supports one betting exchange: Betfair.