Betting exchanges are different from bookmakers. They allow bettors to wager against each other rather than against the bookmaker. Because of this, betting exchanges remove all elements of risk associated with losing.
One of the major betting exchanges is Betfair but for anyone new that visits their website, it looks very similar to how a bookmaker operates.
This article is going to discuss how a betting exchange works, some of the key differences from traditional bookmakers and their impact on the sports betting industry.
Let’s start with how they work.
Betting Exchange Explained
Every wager on a betting exchange is made up of two results – one bettor picks the winner and someone else bets that same team will lose.
It’s worth noting that betting exchanges list their odds in either the fractional or decimal formats only.
So, if you were to bet $100 on an event at 2/1 which returns a profit of $200, you would need someone else to wager $100 at 1/2 to win $20.
This is one of the biggest differences between betting on an exchange and traditional bookmakers.
Here’s an example of what it looks like if you were to bet on totals:
You can see that you have the opportunity to back a result or lay against it. Because of this, it’s easier for bettors to guarantee a return if the odds shorten after they’ve placed their bet.
Placing your bets through a betting exchange is known as social betting.
Ok, so now you know how betting exchanges work, let’s look a little more into how they differ from traditional bookmakers.
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Differences Between Bookmakers And Betting Exchanges
As we have seen, one of the main differences is that you bet against other bettors rather than the bookmaker itself. This shows that when you place a bet with a bookmaker, they automatically lay against your bet, putting up their own money in the event that your bet wins. Betting exchanges then take a commission on the winning bets between the two bettors which is a percentage of the estimated winnings.
Also, betting exchanges allow you to create your own odds. This creates an opportunity to find great value as you don’t have to rely on a bookmaker to set them for you. After all, if layers didn’t give a good price, they won’t have their bets matched.
For example, if you thought the Celtics are going to cover the spread against the Hornets, I can create my own odds – you just need someone else to lay this bet:
Finally, if a bookmaker isn’t willing to risk the odds or the stake you wanted, you couldn’t have that bet, whereas with betting exchanges, all you need is to find another bettor willing to take on the risk to lay your bet.
Impact On Sports Betting
Along with giving bettors the chance to lay bets, betting exchanges have had a big impact on the sports betting industry.
Firstly, betting exchanges had in-play betting before bookmakers. They allowed members to offer prices throughout events, rather than bookies ceasing bets when an event starts.
Furthermore, betting exchanges are responsible for the popular cash out method, placing the lay side of a bet to ensure the same profit whatever the result of an event.
Mobile betting has a lot to thank betting exchanges too. In fact, Betfair in particular became the first online betting company to have their app available on the Apple store.
Are Betting Exchanges Fair?
From all the good that betting exchanges seem to provide, it can be easy to think that there must be a catch somewhere.
One of the main concerns surrounds the individual that lays your bet. How are you supposed to know who they are?
While betting exchanges protect the identity of all their members, they do allow certain information to be passed along freely if anything with your bet starts to become suspicious.
If the integrity of the bet seems in doubt, contact an exchange administrator.
Betting Exchange Terminology
Betting exchanges use their own sports betting terminology. Here are the main phrases you need to understand.
This is the platform developers use to build betting tools and interfaces for betting exchange members.
Lock in a profit or cut your losses while the match is still in-play. You don’t need to wait until the match finishes to book your win. Cash Out offers change as the match progresses; the more likely your bet wins, the bigger the cash out payout.
This is the amount of money available for you to bet (back/lay) at the corresponding odds. Large back or lay figures shows there is lots of interest in the event.
Lay against your original bet to guarantee a profit or smaller loss.
Weight of Money (WOM) shows what money is on the back or lay side of the line.
Betting exchanges give you the ability to bet against other bettors rather than against the house.
They have contributed massively to the sports betting industry. Without them, you wouldn’t have features like cash out or possibly still be waiting to take your bets with you on the go.
If you have any questions about how betting exchanges work, be sure to let us know on Twitter.