Betting Exchange – How Does It Work?

Newbie punters are often confused about what exactly a betting exchange is and how it differs from the classic sportsbook.

Major betting sites such as Betfair have been getting a lot of attention for this innovative approach to online betting. Keep reading to find out all you need to know about betting exchanges.

What is a Betting Exchange?

So how is a betting exchange different from a regular online bookmaker?

With a classic sportsbook, you’re essentially putting up your money against the bookmaker. The bookmaker puts up the betting offers and provides the odds on their own terms, and you decide which ones you want to take. In a way, you’re betting against the bookie – the bulk of their profits comes from the bets customers lose. If you win, however, you’re getting the bookie’s own money.

With betting exchanges, on the other hand, you’re betting against other punters. The basics of it are fairly simple – you and another punter place wagers on different outcomes of an event. The winner takes both stakes. The bookmaker only takes a percentage of the players’ stakes as a fee – which is how they are able to turn a profit. These commissions are only taken from the winners’ profits.

Key Differences

Beyond that, there are some key features to betting exchanges that make them appealing.

Firstly, the betting odds are much better overall. This is because the odds are determined by the players themselves, leaving much more room for error – which results in great value bets if you know what to look for. Odds can be up o 20% better than on traditional sportsbooks.

Also, you are sometimes able to change your bet as the game progresses. This can allow you to reduce losses or lock in profits mid-game.

Furthermore, the potential for profits on exchanges is limitless. Online bookmakers routinely close or limit the accounts of users who are too successful. If a bookie feels your success is cutting into their profits, they won’t hesitate to do this. Betting exchanges, on the other hand, don’t care how good things are going for you – whoever wins or loses, they still get their cut.

However, winning on a betting exchange is ultimately more difficult. You need to outsmart other punters – and no one is going to just hand out their money.

How to Make Money on Betting Exchanges

Due to the fact that the bookmaker will never close or limit your account, betting exchanges are probably the most realistic way of earning some real cash via online betting.

Betting Exchanges allow you to “lay” bets as well as make them. Essentially, this puts you in the shoes of a bookmaker. You offer up odds, and it’s up to other punters to take them. Understandably, if your odds are unreasonable – no one will take them and you’re just wasting your time. You need to hit that sweet spot where your odds are better than an online bookie’s, but still great for your bottom line.

This opens up some interesting opportunities for betting arbitrage as well. For example, you can place bets on regular bookmakers on one outcome and then offer up odds for the opposite outcome on an exchange. If done properly and with some basic maths, this can pretty much guarantee a profit. Just make sure you take into account the exchange’s commission before doing this, or you’ll just end up with no profits or losses, which is a big waste of time.