The Betfair Exchange works differently compared to traditional bookmakers and sportsbooks.
But how does it work?
This guide explains all.
Read on to learn more.
What Is The Betfair Exchange?
The Betfair Exchange does not operate like normal bookmakers and sportsbooks.
With a bookmaker, you bet against the house at their odds.
With the Betfair Exchange, it’s the users that set the odds and you bet against each other.
Betfair then takes a commission for facilitating the bet.
Here’s what the layout looks like when you first land on the page:
The Betfair Exchange involves making “back” and “lay” bets – these terms will become clear as we work through this guide.
How To Use The Betfair Exchange
So, now you know what it is, let’s now discuss how to use it.
The first step is to create an account with the Betfair Exchange.
Once you register, you can deposit funds, bet with other users and withdraw your winnings.
Of course, you are required to verify your identity and age before you can start using the exchange.
Once you’ve been approved, you can then start making bets.
As mentioned, there are two types of bets on the Betting Exchange: the “back” bet and the “lay” bet.
Let’s look at these in more detail.
The Back Bet
Here’s an example to illustrate.
Let’s say we were to bet on the following NFL game between the Los Angeles Chargers and the Tampa Bay Buccaneers:
As you can see, on the handicap market, there are two possible outcomes: a Chargers win or a Buccaneers win.
Now, let’s say we back the Buccaneers to beat the Chargers at 1.3 (-333).
At the time of writing, there is a total of £144 available at this price.
But that’s not the only option.
We could also choose to back the Buccaneers at 1.29 (-345).
The Betfair Exchange let’s you choose any odds and stake you want.
However, there’s no guarantee that your bet will be matched by another user.
If the bet is not matched by the time the match ends, then your stake is refunded.
The odds and money you can stake changes as more money goes on, like below:
As you can see, the odds have shifted 0.05 in Tampa’s favor compared to the previous image.
The more liquid the market, the more likely your bet will be matched, so keep this in mind when looking at potential value betting opportunities.
After the match has finished, Betfair will verify the result before paying out.
Unmatched bets are automatically cancelled.
It may be worth making a few small bets rather than your normal unit size, just to get used to the process (better to lose small if you make a mistake.)
Back betting is the easiest way to the Betfair Exchange.
You may even find that the odds are better than your traditional sportsbook.
This is the difference between the Betfair Exchange and normal sportsbooks.
It’s a bit more complicated but this example shall explain.
Let’s bring back the example from earlier, except this time we will lay the Buccaneers at 1.35 (-286).
The lay bet means that we bet on all other outcomes than the Buccaneers winning the match.
In this case, it’s either a Chargers win or a tie after overtime.
As such, all outcomes are covered.
From here, similar to the back bet, the odds and money you can wager on that bet changes as more money is bet on the game.
How Does A Lay Bet Work?
When you place a lay bet, you are essentially the bookmaker.
In the above example, we are laying the Buccaneers to win (betting on everything except the Buccaneers winning).
So, as the bookmaker, let’s now say that a user bets £50 with you at 2.00 (+100) on the Buccaneers to win.
If the Buccaneers lose or the game ends as a tie after overtime, then the user loses their bet and you keep their £50.
But this is where it gets interesting.
If you take the bet and the Buccaneers do win, then you must pay the user £150 (£100 winnings plus their £50 stake).
Since it’s the users that act as the bookmaker, Betfair can’t make money from juice and losing bets.
Therefore, they make their money via commission for facilitating bets.
Every time a bet wins, Betfair takes a small percentage.
The commission is based on how often you use the Betfair Exchange.
The more bets you place, the lower your commission.
It’s their version of a loyalty program.
However, if your account is inactive, then your reduced commission benefits will decay back to the standard fees.
Betfair explain how much commission you pay with the following graphic:
From their example, if you win £400 with a 40% discount, you pay Betfair £12 commission.
The market base rate is 5%.
If the discount rate wasn’t applied, then you would pay £20 commission rather than £12.
As you continue betting on the Betfair Exchange, you can increase the discount up to 60%.
Losing bets only lose the stake; there’s no commission charged on losing bets.
But losing bets still count towards increasing the discount rate.
How To Trade On The Betfair Exchange
Trading is another feature of the exchange.
The odds change over time as more bets are placed.
There are plenty of ways to trade on Betfair, but for anyone new to the practice, here’s a simple way to understand.
Let’s say you bet on the Chargers/Buccaneers game and you lay the Chargers.
Now, before the game starts, the odds will fluctuate based on the team selections, among other factors.
For example, the Buccaneers may be considered heavy favorites if Tom Brady is up against a rookie QB.
However, if Brady or other star players are injured, then the odds may swing in the Chargers’ favor.
If the odds have swung in your favor, you can now back the Chargers to win to make a profit.
This technique is used in matched betting.
There are pros and cons to matched betting and we have covered each in a separate article – check it out here.
Trading on Betfair follows the same basic principles as trading on the stock exchange: you buy when the prices are low and sell when they’re high.
Successful Betfair trading relies on your ability to predict which way the prices move.
Note: you can also bet in-play on the Betfair Exchange too, and the prices will fluctuate throughout the event.
How To Lay Accumulators On The Betfair Exchange
You can bet multiples ie accumulators on the Betfair Exchange too.
Accumulators are a single bet that covers multiple events.
Every selection must win for the accumulator bet to win.
Even if one selection losses, the the entire bet losses.
Bookmakers like to run special accumulator offers, such as free bets for placing an accumulator, to encourage action or new customer sign ups.
People like to bet accumulators because the payoffs are massive.
The more selections in the accumulator, the less likely it is to win.
As such, the odds lengthen, making the potential payoff huge.
You can easily create an accumulator at most bookmakers, but how do you lay one on the Betfair Exchange?
Well, there are two options.
First, you can make the accumulator and hope that someone matches it.
On the other hand, you can use a pre-made accumulators.
These are the basic ins and outs of the Betfair Exchange.
As noted, one of the biggest advantages of the Betfair Exchange is that you can get better odds compared to traditional bookmakers.
But even so, you still need to find the value to be profitable over the long run.