What is a Betting Exchange?
A betting exchange provides a secure online environment for its users to place bets with each other on the outcome of an event. When betting exchange users place bets, they bet that an outcome either will happen (back) or that it will not happen (lay). A betting exchange acts as a broker, matching the backer with the layer, while protecting the privacy of both. Because the betting exchange ensures that users can only place a bet if they have enough funds in their account to cover any outcome of the bet, the settlement of all bets is guaranteed. Because there is no bookmaker, there is no profit margin built into the prices, which often results in significantly better value odds. In return for providing the facility for users to place bets with each other, a betting exchange normally charges a commission on winning bets.
Using the Exchange
Be Punter or Bookie
Whether you back or lay an outcome for an event depends on whether you believe that outcome will occur. When you back a selection, you are betting that a particular outcome will occur. For example, a certain horse to win a race or a football match ending as a draw. You will make a profit if that outcome happens. This is like making a bet with a traditional bookmaker. The odds are presented, and provided you think the odds represent good value, you back the selection. If you win your back bet, you receive your stake multiplied by the odds less commission, plus your stake back. If you lose your back bet, you lose your stake.
Laying is the opposite of backing. When you lay a selection, you are betting that an outcome will not occur. For example, you might offer a lay bet because you find it easier to pick a horse that will not win rather than one that will win. Laying a selection allows you to assume the role of bookmaker and offer odds to other punters. Your aim is to win a stake from a backer in return for offering a potential return to that backer. If the outcome you are laying does not happen, you receive the backer’s stake. If the outcome occurs, you pay out to the backer the stake multiplied by the odds. For example, if you were to lay a horse for £10 at odds of 5.0, you would be liable to pay out £40 from your account if that horse won. The betting exchange returns the £10 stake to the backer’s plus the £40 profit. If the horse does not win, you keep the £10 staked by the backer.
When a back bet and a lay bet are placed on the same market selection at the same, or similar odds, a betting exchange automatically links these two opposing bets, and they become matched. Once bets are matched, the odds cannot be changed. In addition, matched bets cannot be cancelled by either backer or layer.
For example, Manchester United are playing Chelsea in the Premiership. A betting exchange user does not think Chelsea will win and lays Chelsea at odds of 2.0, with a stake of £100. Another user wants to back Chelsea to win at odds of 2.0, with a stake of £100. This user sees the bet on the betting exchange, and decides to take it. A betting exchange automatically matches these two bets. If Chelsea lose or draw, the layer wins the bet; if Chelsea win, the backer wins the bet.
A betting exchange always ensures its users get the best value available on the system regardless of whether they are laying an outcome or backing it. For example, a user stakes £100 on Chelsea to win at a price of 2.0, and £80 is still available on the system at a price of 2.1. In this situation, a betting exchange will automatically match the bet to the user’s best advantage – by allocating the first £80 of the user’s stake at the 2.1 price and the remaining £20 at the 2.0 price. In addition, if better odds become available before a bet is confirmed, a betting exchange will match the bet at the best available price – higher for backing, and lower for laying.
If you are not happy with the price on offer, a betting exchange gives you the opportunity to request even better odds in the hope that another punter accepts your offer. For example, you may feel that the current price of 3.0 is too high a price to lay a particular selection, and so offer a lay bet at 2.7 instead. If you are realistic when offering bets, the odds you request may stand a very good chance of being matched.
A betting exchange gives its users the opportunity to place bets “in-play” while an event is taking place. As odds change, punters can constantly revise and improve their position. For example, laying a team they initially backed as prices move in the opponent’s favour. If you think you can read the changing circumstances of an event better than your fellow punters, in-play betting is definitely for you.