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If you\u2019ve spent any time looking at online betting companies then you\u2019ll doubtless have come across the idea of an Exchange at one time or another. The most famous example is Betfair, which practically dominates the Exchange betting market. That said, other operators such as Ladbrokes have launched their own Exchanges in recent times, presenting Betfair with some market rivalry.<\/p>\n
In simple terms, the difference between an Exchange and a traditional bookmaker is that a bookmaker will offer you odds that are slightly below the real value<\/a> of the bet, which is their take. At an Exchange, however the people offering odds essentially get to work as their own bookmakers. They set the odds and you can choose whether to take them or not. We\u2019ll explain it all in more detail on this page.<\/p>\n Whilst the odds may vary slightly from bookie to bookie, they\u2019re generally going to be the same and you can\u2019t do anything to alter them other than changing your bet. Regardless of the market you\u2019ve chosen to bet on, whether it be the winner of the next General Election or the outcome of a football match, you\u2019re going up against the bookmaker and if your bet wins they\u2019ll pay you, if it doesn\u2019t then you\u2019ll lose your stake.<\/p>\n Bookmakers will find odds for the event that you\u2019re trying to bet on and then build their own take into said odds. That means that they won\u2019t truly be representative of the likely outcome of said event. Instead, the bookie will add in their vigorish and make the odds slightly less than they really should be, which is how they always make a profit. If the true odds should be 5\/1, say, the bookie will offer you 3\/1.<\/p>\n When it comes to betting on an Exchange, things work slightly differently. Instead of placing your bets against a bookmaker, you\u2019re now betting against other bettors who are essentially acting as the bookie. You will either offer odds on an event that other players will either accept or reject or else you\u2019ll see odds from other punters and accept them or reject them. There are two types of bet placed on an Exchange:<\/p>\n If you\u2019re backing it then it\u2019s similar to what you\u2019d do with a traditional bookmaker, wherein you\u2019re expecting that outcome to happen. If, on the other hand, you choose to Lay a bet then you\u2019re saying that any outcome other than that one<\/em> will happen. The best example to explain is horse racing, in which backing a horse will mean you think it will win the race but laying it means that you think literally any other horse will win instead.<\/p>\n If you Back a horse and it wins, you win your bet. If you Lay a horse and it wins then you lose your bet. If you Back a horse and it loses then you lose your bet. If you Lay a horse and it loses then you win your bet. It can take a while to get your head around how the Exchange works, so it\u2019s not recommended to get involved with one until you really make sure that you understand what you\u2019re doing.<\/p>\n There are two key differences between a traditional bookmaker and a betting Exchange. The first is that with an Exchange you can either offer the odds for other people to accept, essentially playing the role of the bookie, or else you can accept odds offered by others and let them play the bookie. The second is that there is no vigorish built into the odds and instead Exchanges make their money by charging a commission on winning bets.<\/p>\n Commissions can start from as little as 1% and can go as high as an Exchange operator wants. Of course, the higher the commission is the less likely it is that people will use the site, so it\u2019s unusual for them to go higher than 5%. Particularly successful punters can negotiate a commission level with the betting Exchange operator, threatening to take their business elsewhere if the percentage isn\u2019t dropped.<\/p>\n Betting Exchanges will offer more competitive odds, which is because they operate as peer-to-peer platforms. Exchanges are driven according to supply and demand, meaning that the odds are always likely to be better than a bookmaker\u2019s, which need to ensure that the books are balanced. The other thing is that the commission at Exchanges is only charged on winning bets, not on losing ones.<\/p>\n Whereas a bookmaker will ensure that the overround built into bets allows them to make a profit regardless of an event\u2019s outcome, someone will win and someone will lose in the world of the betting Exchange. That means that Exchanges are far closer to what an event\u2019s true outcome is actually likely to be in terms of probability. Even when you take commission into account, you\u2019re likely to get better value from an Exchange.<\/p>\n Whilst that might sound really appealing, it isn\u2019t without risk. Betting on an Exchange as akin to trading on the stock market, with buying and selling of shares changed for backing and laying outcomes. This means that you can be at risk of losing a lot of money if you\u2019ve offered odds on something and the event doesn\u2019t pan out as you\u2019d wish it to. It\u2019s why you won\u2019t be able to offer odds unless you\u2019ve got the money in your account to pay out.<\/p>\n The flip side of that is that the sorts of restrictions put in place on winning punters at a bookmaker are far less common at Exchanges<\/a>. Account restrictions and closures as well as restraints on the level of bets you can place with traditional bookmakers are likely to happen if you\u2019re doing well because they don\u2019t want to lose money, whereas betting exchanges are only intermediaries and therefore don\u2019t mind if you\u2019re winning all the time.<\/p>\n It\u2019s also important to acknowledge that professionals will use Exchanges to find people who don\u2019t really know what they\u2019re doing and look to take their money. It\u2019s all perfectly legal as all they\u2019re doing is finding inexperience punters and offering them odds that they\u2019ll accept even though they\u2019re not great. This means that if you don\u2019t know what you\u2019re doing you could lose money pretty quickly.<\/p>\nTraditional Fixed Odds Bookmakers<\/h2>\n
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Whether you like to place your bets with William Hill, Betfred, Coral or one of the many other traditional bookmakers that exist, you\u2019ll likely have a good sense of how they work. For the purposes of this page, however, we\u2019ll explain them again to make sure that you know what we\u2019re talking about. Traditional bookmakers offer fixed odds that you can either accept or shop around to see if anyone else offers better ones.<\/p>\nBetting Exchanges<\/h2>\n
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Fixed Odds vs Exchange: Which Is Better?<\/h2>\n
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This is the key question when it comes to thinking about a betting Exchange over a traditional bookmaker. The honest answer is that it depends what you want to get out of your betting experience. Because there isn\u2019t a vigorish built into the odds offered on an Exchange, the odds will generally be much better at an Exchange than with a bookie. Sometimes the bookie\u2019s margin can be as high as 20%.<\/p>\nMarket Liquidity<\/h2>\n
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The most important part of an Exchange