Betting Exchange Guide for Dummies: Betting Exchange Explained

The world of sports betting has been revolutionised by betting exchanges, which are all about taking the bookmaker out of the equation. The bookmaker has always been the entity to provide the markets for a specific event. A punter has been able to use those markets in order to make bets. Sports betting exchange makes it possible for an individual to place a bet without the presence of a bookmaker.

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What Is A Betting Exchange in Sports?

The concept of exchange bookmakers in the world of sports is relatively new with Betfair one of the most popular. Here, traders will be placing bets against other individuals instead of a bookmaker. As a result, an individual can create markets that would allow other punters to either back or lay the event. Unlike in the case of a traditional bet offered by the bookmaker, it is possible to change the stance when going in the sportsbook exchange system.

The concept of ‘back’ and ‘lay’ have the biggest presence in this form of betting.

Betting Exchange Example

Since the betting exchange is a peer-to-peer network, it is possible to make bets on markets provided by other punters. Let us consider a game between Chelsea and Manchester United. If punter 1 expects Chelsea to beat Manchester United, the individual will be placing a wager on such an event. This is the regular form of betting, but exchange betting sites allow a punter to go the opposite way and to lay against Manchester United winning the game. It effectively means that the punter 1 does not expect United to win the game.

At the same time, punter 2 is logging into the exchange site in order to find the punter 1 placed a lay bet on Manchester United at 4.0. Now, let us consider that punter 2 expects an opposite result and is predicting a win for Manchester United. Punter 2 will find that the odds for backing a United win are significantly higher at this price – compared with the regular bookmaker. He would choose to match punter 1’s stake. The sports betting exchange now sees punter 1 having a liability of £40 while punter 2 can get a return of £40.

Another advantage with regard to going with the exchange betting system is the ability to take advantage of different prices. The market fluctuates quite rapidly as the event approaches and a punter can choose to lay a stake of £100 on a win for Chelsea at 1.8, but they will also be able to place a £150 bet on the same event at odds of 1.9 if there are changes in certain elements like the news. The exchange betting tips also seem to recommend opting for different prices on the same event, as this may help in improving the profits. The bigger matches usually have various changes in prices just prior to kick-off.

Backing and laying are areas where an individual can make the most money, but it is imperative to understand this betting system before choosing an exchange.

What Is Betting Exchange Good for?

The exchange betting sites and their ability to provide a marketplace for the various odds are good for every sports. However, the primary reason for more and more punters to consider joining up with the exchange market is due to the availability of higher odds compared to a regular bookmaker. Furthermore, the option of going against an event can significantly improve the degree of success.

How Does Betting Exchange Work?

The betting exchange strategies involve two major concepts – back and lay. When a punter chooses to ‘back’ a team or player, they are effectively placing a bet just like they would at a regular bookmaker or sports book. The ‘lay’ market is where the differences arise. In the ‘lay’ concept, the punter becomes the bookmaker and they would be taking the stakes. Irrespective of the concept of betting, the betting exchange sites merely act as a middleman for bringing together the two different punters.

The sites charge a fee of around 5% for their services, but this commission is applicable only if the player ends up winning a bet. The losing player does not have to pay a commission and their only liability is the wager itself. The bookmaker is not going to set the odds and it will be decided by the punter. As a result, an individual should do not target at winning 50% of the bets as only a 52% victory is likely to provide some reasonable returns.

One of the factors that makes the sportsbook exchange a great option is the constant changes in price that make it possible for an individual to cover every possible outcome. As a result, an individual can aim for a profit from a bet irrespective of the outcome. Arbitrage betting technique is quite popular on this front.

Betting Exchange Pros and Cons

Pros

• The major advantage of the sportsbook exchange is the availability of better odds since it is a free market. A punter is not forced to accept odds set by the bookmaker, who spends a huge amount of time and resources in order to determine the ideal odds that would produce a house edge is irrespective of the outcome. In the exchange market, the punter is free to choose odds.
• In the case of a 1X2 market, the bookmaker has a greater house edge. The punter also stands to lose heavily even with an informed decision. In the above example, punter 1 is extremely confident that Manchester United will not beat Chelsea. This implies a Chelsea win or a draw, but the punter 1 will not be receiving the extravagant 4.0 odds from a regular bookmaker for this double chance.
• The profit margins in the case of the betting exchanges are much higher than a punter would stand to make from a bookmaker. It is a reason for the growing number of exchange betting tips, which provide an insight into the way a punter can stand to gain significant money.

Cons

• The biggest issue many see with regard to the betting exchanges are the fees or commissions charged by the exchange betting sites. Typically, a site would charge around 5% of the payout as a commission and these have to be factored in before placing the bet at a specific price.
• Even though individuals from across the world are being brought together by the sports betting exchange sites, it is still not possible to access some of the non-mainstream markets that are far more important to some individuals. A bookmaker will usually provide odds and markets for these events.