What is a Betting Exchange
To put it simply, a Betting Exchange is where you are not betting on a price provided by a Sportsbook but are instead naming your own price and seeing if someone will take the other side of that bet at your chosen price. If they do then a wager is placed between the two people, if it isn’t that your stake is returned to your account.
This means that the Sportsbook operating the Exchange is taking on zero liabilities and simply takes a small commission of all winning bets. By doing this they are limiting their risk but also allowing bettors to get better prices as no house edge is being factored into any of the prices offered.
Across the Globe, Betting Exchanges are becoming all the more common with Betfair being a big player in the online sports gambling scene most notably in the UK, Ireland and Australia.
How it works
One of things that makes betting exchanges unique is that it allows bettors to take both sides of the bet. Most people are used to bet on something happening (known on the Exchanges are backing) but taking the house position (known on the Exchanges as laying) is alien.
If you want to back the Dallas Cowboys at +200 to beat the New York Giants for $10 on an Exchange you will need someone to match that bet on the opposite side. You’ll need a bettor to say that they do not believe the Cowboys will do the job.
In this situation the person who backed the Cowboys would potentially win $30 ($10 original stake plus $20) and they would get that money from the layer. If the Cowboys lost then the layer would take the original $10 stake from the backer.
Which side won the bet would give a small percentage of their profit to the house.
Why use an Exchange:
The biggest benefit of using an Exchange rather than a traditional online Sportsbook is that you get to pick the odds. This means that you can put down the odds that you want in the hope that someone will come along and take you up on your bet.
This often leads to much better prices than an online Sportsbook will offer because bettors from all over the country have different opinions and biases that can be used to get better prices. You’ll often find that bettors are partial to betting on their own teams and therefore will offer a price based on their hopes rather than pure logic.
Another massive plus point for Exchanges is that betting in-play can often lead to guaranteed profit. If you back an outsider and they take the lead early in the game, the live price movement can quickly lead to them becoming the favorite. In that case backing the original favorite, now priced up as an outsider would lead to a certain profit.
