What is a betting exchange?
A betting exchange is a place where you can both buy and sell bets. It works exactly the same way a stock exchange does. Some people are buying and some people are selling. The price changes depending on how many people are doing each.
If everyone is trying to buy something the price will go up. If everyone is trying to sell the price will go down.
The exchange itself doesn’t buy or sell bets, it just supplies a marketplace for all the buyers and sellers to get together and trade.
The main difference between a betting exchange and a stock exchange (other than what you buy) is the language used. Instead of ‘buying’ and ‘selling’, on a betting exchange we either ‘back’ or ‘lay’. Instead of the ‘price’ we talk about the ‘odds’.
Betfair is the biggest betting exchange in the world and the one that we recommend using. They have been in business since 1999 and were the first company to offer lay betting (and, therefore, matched betting) to the general public.
If you don’t have a Betfair account just click this banner to sign up.
The Betfair support videos explain everything, individualising every type of bet. It will open up a whole world of betting if you have not used it before.
Betting exchanges do not set their own odds, so it is impossible for them to have an over-round. The odds on an exchange are set by the users as they back and lay bets. If the majority of people want to back , the odds will go down. If the majority want to lay, the odds will go up.
Because there is no over-round, the odds at an exchange are usually better than at a traditional bookie.
However, it means that the exchange has to find a different way of making money and they do that by charging commission on profits.
For most sports Betfair has a basic commission rate of 5%, however you can reduce this by earning Betfair points. These are basically loyalty points that you accumulate with every bet that you place. As you work your way through the sign-up offers you will probably see your Betfair commission drop from 5% to 4.9% as a result of these points. The more matched betting you do, the lower the commission you will pay.