Betting exchanges: an introduction

When you bet with a bookmaker, you are betting with a business, a business which is in business to make money. Every time you bet with a bookmaker, you are accepting odds with a built-in profit margin in them and, over time unless you are very, very good, that profit margin will grind you down, leaving you a loser overall.

At a betting exchange, you are betting not with a business but with other punters

And, even if you are very, very,good, you will soon find that the bookmaker will restrict the size of your stake or even close your account altogether.

At a betting exchange, you are betting not with a business but with other punters, private individuals like yourself. As private individuals, there is no reason why the layer should have a built-in advantage over the backer and competition between users in the exchange marketplace ensures that there is no built-in profit margin.

Ask a bookmaker to quote you odds on a spin of a coin coming down heads or tails and the bookmaker will quote you 4/5 each of two. On an exchange, you will be able to get matched at evens, the true price.

There is a charge - exchanges charge commission rates varying from 5% to 1%, depending on where you bet or how heavily you bet, but this charge still leaves you better off than betting with a bookmaker.

Indeed, it is estimated that odds at exchanges are on average 20% better than those offered by bookmakers - i.e. you'll get 12/1 about a 10/1 chance, or 4.8/1 (5.8 ) about a 4/1 (5.0) chance.

they are also places where you can bet on outcomes to lose

It doesn't sound dramatic, but it makes a major impact on your long-term betting balance sheet. So, a punters' paradise for backers, but what else?

Well, they are also places where you can bet on outcomes to lose - by laying - and where, if the odds offered do not appeal, you can ask for odds by leaving an order.

For example, if you want 9/2 about a horse and it is only on offer at 4/1, you can leave a request to back at 9/2 and some, or all, of you bet might be matched up until the start of the race.

At the off, any unmatched portion of your bet will be returned if you have not already cancelled it yourself.

Betting Exchanges - places where you can back at on average 20% better odds than with a bookmaker, where you can lay and where you can ask for odds.

Examples of current maximum commission rates are: Betfair 5% Betdaq 3% Backandlay 1%