What Is a Betting Exchange? Beginner’s Guide to Betting
In this day and age, online betting sites are more popular than ever. Apart from regular online bookmakers or casino sites with a bookmaker attached to them, you can also wager at betting exchanges.
If you are new to betting or have never used a betting exchange before, we will help you learn what a betting exchange is and how it works. In addition, we will also highlight the key differences between regular bookmakers and betting exchanges and show you the advantages of using a betting exchange.
Six Quick Facts About Exchange Wagering
- Betfair is one of the largest betting exchanges in the UK.
- You can lay a bet at a betting exchange, which means betting against an outcome.
- The odds on a particular selection at a betting exchange depend on how many punters back or lay a bet.
- A betting exchange acts as an intermediary that allows punters to bet against each other.
- You can adjust the odds as long as someone is willing to take your odds and lay against your bet.
- Betting exchanges charge a small fee for their services, usually ranging from 2% to 5%.
How Does A Betting Exchange Work?
Even though several clear differences exist between regular bookmakers and betting exchanges, both betting sites allow you to wager money on various outcomes in the hope of making a profit.
When it comes to regular bookmakers, they provide you with the odds and allow you to stake your money on a particular outcome. In case you lose, a bookmaker receives your initial stake, and if you win, a bookmaker pays out your winnings. Therefore, you are betting against the bookmaker on its terms.
However, it works a bit differently with exchange wagering, and instead of betting against a provider, an exchange merely acts as an intermediary. In other words, a betting exchange is a platform that allows punters to bet against one another.
The most significant difference between these betting sites is that a bookmaker allows you to back a particular outcome, while with betting exchanges, you can also lay a bet. For example, if Manchester United is playing with Liverpool, you can back Manchester United, Liverpool, or a draw at a regular bookmaker. When it comes to a betting exchange, if you lay against Liverpool, it means you are betting on every outcome other than Liverpool winning the match.
Betting Exchanges Explained
One of the biggest reasons betting exchanges are so popular is because they provide better odds than regular bookmakers. Because of the way they work, bookmakers and betting exchanges calculate and present the odds differently.
When it comes to learning how to use a betting exchange and how bookmakers calculate the odds, the easiest way to explain it is in an example. Therefore, let’s use the same one as before and say that Manchester United is playing with Liverpool. In this case, the bookmaker has given the odds of 1.7 for Liverpool to win and 2.1 for Manchester to win.
Because we know the odds, we can easily calculate the implied probability of a team winning, which is done by following this equation:
( 1 / Decimal Odds ) x 100
Before we explain to you how to use a betting exchange, let’s quickly calculate the implied probability for this particular match and show you why betting exchanges have much better odds.
By following the equation, we can see that Liverpool has 58.8% chances of winning the match, and Manchester United has 47.6% of chances. If you add one of these probabilities to another, you will get 106.4%. In this case, the extra 6.4% is considered the vig, which is how bookmakers make profits. Of course, while this doesn’t sound extremely high, the vig can go as high as 20% in some markets.
As far as sports betting exchanges go, instead of manipulating the odds in their favour, punters create the odds. For example, if you wish to back a team with £10 at the odds of 10/1, you will need to find someone willing to take those odds and lay £100 at the odds of 1/10.
Since betting exchanges work as a platform that allows you to bet and lay against a particular outcome, they neither influence the odds nor care about them. Instead, they charge a small fee for their services, usually between 2% and 5%.
How to Use a Betting Exchange
To use a betting exchange, you will first have to register at their website. The process is fairly similar to registering at a regular bookmaker. In case you have never done it, simply find a button labelled as ‘Register’, ‘Join Now’, or anything similar. After you click the button, you will be required to provide personal information, such as your name, last name, address, and so on.
However, now that you know what a betting exchange is and how it operates, you should also know that various gambling authorities regulate betting exchanges in the UK, just as is the case with regular bookmakers. Because of that, you need to go through various KYC (know your customer) procedures to complete the registration.
Moreover, due to these regulations, a betting exchange has to verify your identity before processing any payments, so make sure that all the information you provide during the registration process is correct.
Once you register and deposit into your account, figuring out how betting exchange works is relatively easy. All you have to do is simply navigate the match you want to bet on and select whether you wish to lay or back a particular outcome. Lastly, enter how much you are willing to stake or accept the wager if you are laying against an outcome.
What Is Exchange Wagering and How Does It Work?
Let’s say that you wish to back Liverpool at odds of 1.7 with a stake of £10. Once you confirm the selection and your stake, a betting exchange will match your bet. In case Liverpool wins, you will make £7 in profit from another punter who placed a lay bet against Liverpool. You will also receive your initial stake of £10 for a total payout of £17. In case you lose your bet, another user will receive your initial stake of £10.
An important thing to know about exchange wagering is that you do not have to bet on specific odds. Instead, you can request specific odds and wait for another user to accept your wager and lay against those odds. In case another punter doesn’t accept your bet, it will be unmatched, and your initial stake will be returned.
When it comes to placing lay bets, the process is rather identical, and the only difference between the two is the terminology. However, in this case, you are playing the role of a bookmaker.
Depending on the sports betting exchange you use, you might encounter something called a ‘back stake’ — the amount you will win if your lay bet is successful. You may also encounter a ‘bet liability’, which is the amount you will lose if your bet is unsuccessful. From the previous example, if you lay against Liverpool at the odds of 1.7, your back stake would be £10. As far as bet liability goes, you would lose £7.
Lastly, make sure to remember that betting exchanges charge a small fee calculated before receiving your profits.
Why Punters Use Sports Betting Exchanges
Apart from the differences we’ve already mentioned, punters use betting exchanges for several other reasons, the most significant one being that winners are always welcome. For example, some bookmakers have a notorious reputation for terminating successful punters’ accounts and banning them from betting simply because they just keep on winning.
However, when it comes to learning what a betting exchange is, you should know that these platforms don’t care who wins or how much they win. Their commission is guaranteed either way since other punters have to cover up the bet when laying against it, so betting exchanges are never at a loss. Therefore, if you keep on winning, you can rest assured that a betting exchange won’t do something shady and ban you from their platform.
Additionally, most regular bookmakers usually set limits on how much you can bet for a particular selection, which isn’t the case with sports betting exchanges. Since you are betting against other punters, you can set the odds to your liking and bet as much as you want, as long as you have enough money in your account to cover the bet. At the same time, you will also need another punter who’s willing to take your odds and lay against your bet.
Since betting exchanges welcome winners and offer better odds, many punters shift from traditional betting and place their bets at a betting exchange. Whether you are an experienced punter or entirely new to betting, you shouldn’t have any difficulties using a betting exchange now that you know what a betting exchange is and how it works.
If you wish to check a betting exchange and see what it offers, Betfair is undoubtedly one of the biggest and most popular betting exchanges in the UK. If you enjoy variety, you should also check out other popular betting exchanges like Smarkets, Matchbook, and Ladbrokes.