Betting Exchanges are somehow relatively new in the betting world. They appeared somewhere after year 2.000 when two programmers invented Betfair, as a platform for horse betting. Right away they saw the opportunity and the fact that a platform that function like a marketplace between bettors is what betting industry needed , to be complete.
What is a Betting Exchange ?
The betting exchanges had transformed the betting industry forever, by giving punters the opportunity to establish their own odds prices.
Also exchanges brang something new into the betting industry . While soft and sharp bookmakers offers ONLY the possibility to bet on outcome (to BACK that outcome) , betting exchanges give the chance to anyone to BET AGAINST that outcome (LAY bet).
For example, at any conventional bookmakers, in a horse race, you can bet on each horse. But .. how do you bet that a specific horse will NOT win the race ? You cannot do this on normal bookies. For this, you need to use a betting exchange :
Betting exchanges mark their profit by taking a small cut from the winner of that bet. Each betting exchange have their own policy, some of them take a flat 1.5% from the winnings. Other exchanges vary their percentage between 1 and 5 % , depending on several factors. Some of them offer players the change to reduce the percentage, depending of their activity and total monthly wagered amount of money .
What this means for bettors ?
This means more profit for players. Also, this means the odds prices found on betting exchanges markets are more fair, more correct. Their odds are close to the true probabilities of that specific market’s outcome, and just a little better than odds offered by sharp bookmakers. And way better than odd prices offered by soft bookmakers. Let me show you an example (click on the image to see the it bigger) . Just look at this two horses odds prices for the next Kempton race :
You can see on right side odd prices offered by Bet365 (and they have maybe the biggest odds from soft bookies, for horse racing). In the left side you have Betfair Exchange , and the REAL VALUE prices in the market for those horses :
– Currumbin – Bet365 : 3.75 odd, Betfair : 4.7 ( +20% more profit in you bet on exchange)
– Further Measure – Bet365 : odd 6 , and 6.6 odd on Betfair (+9% if you bet on exchange)
How Betting Exchanges set their odds?
Betting Exchanges do not set or calculate the changes for an outcome probability. They let the market to decide. Bettors decide the prices themselves by their action (to back an outcome or to bet against it) . For example.. if more bettors thinks that a game will end with Under 3.5 goals, they will bet more money on Under, so the odd for Under 3.5 will drop, and Over 3.5 odd will rise. And vice-versa, if more money will come on Over 3.5, then, off will drop for Over 3.5, and the price for Under 3.5 will go higher.
Basically is similar to a normal stock exchange. If more companies needs oil fast, so if the demand is bigger than supply , the price of oil will rise. If supply is bigger than demand, the oil price will go down.
How the prices meet in a betting exchange ?
When a price is taken, someone somewhere else has laid the bet at that price and vice versa. If you want to place a bet at a certain price, someone has to lay that price. The bets are displayed in decimal format rather than fractional.
Odds differences between exchanges and soft or sharp bookies
This way how odds prices in a betting exchange are established , make possible odds differences between exchanges and the other types of online bookmakers. Sometimes, because of high margins of soft bookmakers m both outcomes of a betting line are higher at the betting exchange.
And sometimes, the odds difference is so big between exchanges and soft bookies, and arbitrage betting opportunities (sure bets) may appear. They appear especially on over / under markets and handicap lines / asian goal handicap .
On the other hand, because sharp bookmakers are having low margins and they are also fast updating their odds, arbitrage opportunities between exchanges and sharp bookies are EXTREMELY rare.
Betting Exchanges – are they licensed ?
When it comes about the regulatory aspect of their business, betting exchanges are licensed in different countries like Malta, UK (Great Britain Gambling Commission).
Some of the betting exchanges belong to bigger betting operators, so they belong to huge companies. For example Betfair merge with PaddyPower (a big UK operator) in 2016. Betdaq was bought by Ladbrokes (another big UK bookmaker) with the intention of adding an exchange to their sportbook.
So, you don’t need to worry about safety of your funds when using betting exchanges. Also, like sharp bookmakers, they are well established companies, sometimes listed on Stock Exchange. Betfair is a good example, being listed on London Stock Exchange since 2010.
Betting Exchanges Complexity
When it comes about betting exchanges functionality , they are created to be more complex than soft or sharp bookmakers. Because you can BACK a bet or LAY a bet, because your bet is also depending of many things ( like market liquidity ) … bettors needs to learn how to use betting exchange correctly. They need to have patience, to read articles about back / lay, about how to use all the functionalities of an exchange.
But then, they will be fully rewarded . Because a betting exchange may be useful in many strategies like Arbitrage Betting, Value Betting, Matched Betting. Because when betting using exchanges it’s easier to trade your bet (placing a lay bet on opposite of your back bet , or vice-versa) , if odd prices have evolved in your favour.
Betting exchanges are a gold mines for a lot of sports. One of them is Horse Racing or Greyhound Racing. Horse Scalping is a betting strategy that can be used ONLY on a betting exchange (only on Betfair). Also Horse Value Betting and Horse Trading are strategies that can be used with Betting Exchanges
Betting Exchanges – Pros
Now let’s talk about pro and cons. Honestly, as a professional bettor, I can see only pros , but exchanges have also their own disadvantages.
1) They Don’t Have Margins.
A betting exchange dont use margins, so this means more money for the players. Even with the exchanges taxes (which are only a few percentages ) , a bettor still have a better return in comparison if he had bet the same market with a soft / sharp bookmaker. So , using betting exchanges is suitable for professional bettors.
2) They don’t limit accounts. Winners are welcomed.
Betting exchanges do not limit accounts. Why would they ? You don’t bet against them, against a bookmakers, so you don’t take the money FROM a bookmakers. If you win a bet, you win money from other bettors. Betting exchanges takes a small tax from the winners, so they don’t care who is winning !
3) Higher Betting Limits on Big Games.
Exchanges Companies don’t have limits on a bet size. You can bet as long as there are money placed in the market ! For example :
Above, if you want to place 500 euros in 1.67 of on West Ham victory, just take the bet. But if you want to place 10.000 euros on West Ham .. then you’ll take 1000 euros on 1.67 , 6000 euros in 1.66 , and 3.000 euros in 1.65 odd . And so on…
4) Possibility to apply various tactics or strategies.
On Betting exchanges you can use almost ANY betting strategy that I know of. Except one : Bonus Hunting Strategy . Still, having an account at a betting exchange it’s important in Bonus Hunting if you combine that with Matched Betting Strategy. Also, it is easy for a bettors to trade his bet for profit, if the odds had modify in his favour.
5) Possibility to Bet For, or Bet Against .
As I said, one of the main features of exchanges is the possibility to BACK an outcome, or to BET AGAINST that outcome (LAY) . This option is not offered by sharp or soft bookies.
Betting Exchanges – Cons
Now let’s see what we consider to be the betting exchanges disadvantages, when you betting with them.
1) Lack of Bonuses.
Betting exchanges do not offer the same promotions that traditional soft bookmakers are offering. Sometimes they can have offers for new customers, like small amount of free bets, or they can offer for new customers a period without paying that tax of 2% if they wins.
2) Fewer betting markets / options.
3) Lack of betting accumulators
You cannot build an accumulator using a betting exchange. However, this is not something that can bother professional bettors who use exchanges, as they don’t bet on accumulators anyway.
4) Low Liquidity on different markets / fixtures.
You can always find in the market someone to bet against you for a match winner for example. But if you trying to bet on obscure, lower leagues, fixtures , it is hard to get your bet matched by another bettor. This is because on those games / leagues, the market liquidity is very low.
5) Access to exchanges can be tricky sometimes
If you live in specific countries from Europe, accessing them and registering with such betting exchanges can be harder. However, you can bypass different restrictions by using 2 methods:
– Using a VPN provider to get an IP different from your location.
– Using some Betting Brokers Services, who will grant for you access to lots of sharp bookmakers and exchanges
Examples of Betting Exchanges
Well, I will give you just a small list of the biggest soft bookies. It’s hard to believe that someone could ever make a complete list of soft sportbookies, as new bookies appear every day. But some of the biggest soft bookmakers are :
- Piwi247
- Betdaq
- Matchbook
- Smarkets
- Betfair
- SpreadEx
Final saying about Betting Exchanges
If you read it all, I hope you understand what are the advantages and disadvantages when you are placing bets on a betting exchange. They are targeting a specific kind of players, professional bettors and high stakes punters, like sharp bookmakers.
Having an account with a Betting Exchange is a MUST for every serious bettor. It is a MUST for any strategy exists. If we talk about arbitrage betting strategy or value betting, than you need to use a betting exchange. One of the main advantage when placing bets with them, is that exchanges never limit winners.
To be able to choose the right category of bookmakers for you , it’s better to read our descriptions and recommendations for each one category :
Sharp Bookmakers – No More Limited Accounts
Soft Bookmakers – Fully Explained
Betting Brokers – Become a High-Roller
Asian Bookmakers – Another side of betting
Crypto Bookmakers – The Future Of Betting
