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A short introduction to betting exchanges
From Timothy Upton: January 2018


What is a betting exchange?

Unlike traditional bookmakers, where the bookie sets prices and is the counterparty for each bet, thus often putting themselves at risk of loss if more money comes on one party in an event than the other, betting exchanges are simply facilitators for bets placed between other counter parties. They hold the money in trust so that individuals can bet against each other with full confidence they will be paid if their bet wins.

Betting exchanges provide the portal for people who wish to bet on anything at all. The only limitation is finding a person to take the other side of the bet. Betting exchanges will set up books on all popular betting events, but individuals can also propose obscure bets on some exchanges, which will be published if the exchange thinks that a counter party might be found.

When did they appear?

Betting exchanges were a relatively late arrival on the gambling landscape, with major players flutter.com and Betfair only appearing towards the end of the 20th century. In 2001 they were merged and by 2002 flutter .com had been shut down in favour of Betfair, which became and remained the biggest betting exchange in the world. The second largest betting exchange at the time of writing is believed to be Betdaq, owned by Ladbrokes.

How do betting exchanges make their money?

Betting exchanges operate on a simple comission basis, taking a pre-ordained percentage of the money from each betting transaction. The commission is taken out of the winners payout.

What are the advantages of betting exchanges over bookmakers?

The main advantage o the punter is that you can often find a better price on an exchange than from a bookie. Bookies tend to have a fair bit of skill in setting prices, their livelihood depends on not getting it too badly wrong too often, whereas some of the people who take bets on betting exchanges can be very subjective and accept wagers at prices much worse than they probably should be.

Another great advantage of betting exchanges is the ability to lay, that is to bet on something to lose. In a two party event this isn't so relevant, as laying one party to lose is the same as backing the other to win. But in a multi party event like a horse race, the ability to, for example, lay the favourite, is a far simpler and better option than backing all the other horses except the favourite to win.

Joining a betting exchange

You can find several of the leading betting exchanges with a search engine, or here is a Betfair sign up bonus if you are happy joining the biggest betting exchange in the world.

 


 

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