Betting exchanges have had a huge impact on the way the betting industry works. They’re slightly different to the traditional bookmaker you’re used to seeing on the high street. But, which is the best betting exchange and why should you use them?
Here are some of the key points we’ll look at in depth in this article:
- What is a betting exchange?
- The differences between a traditional bookmaker and a betting exchange
- What to look for in a good betting exchange
- Some of the main players in the game
- The best betting exchange in our view
What is a Betting Exchange?
A betting exchange is simply an online marketplace where you can place bets against other gamblers. They allow someone looking to back an outcome and someone looking to back against that same outcome to bet against each other.
Gambler A wants to bet Chelsea will beat Leicester in their next Premier League game.
Gambler B wants to bet that Chelsea will NOT beat Leicester in their next game.
In other words, each gambler has opposing predictions. A betting exchange allows these two punters to bet against each other. These two gamblers will never know who they’re betting against, it’s all done online via a secure trading platform.
Depending on which player wins the bet, the winning player receives money from the losing player. The betting exchange takes a commission for effectively facilitating and completing the bet. It’s a very simple and effective concept that allows more freedom for the gamblers.
In the past, gamblers were very restricted in how and what they could bet on. Nowadays, you can place different types of bet at the same site online, making the whole gambling process a hell of a lot easier.
This is the basic principle that all betting exchanges are built on.
Key Differences Between Betting Exchanges and Bookmakers
As we’ve already mentioned the main difference between a betting exchange and traditional bookmaker is that gamblers bet against each other rather than against the bookmaker.
The odds at a betting exchange are better than the ones at the bookmakers. Ultimately this means you get more bang for your buck on your winnings bets.
Different Business Models
The reason the odds are better at a betting exchange is down to how the two different models make money.
The bookies make money by offering less efficient odds. These odds have the bookies margin built in, which can be as high as 20%. This means lower odds for the punter and less profit if your bet wins.
A betting exchange provides the actual market price and takes a commission, between 1.5% and 5%, of a winning bet. Some betting exchanges also charge a commission on losing bets however, our preferred sites don’t do this. This model, driven by supply and demand, allows the punters to set the odds which is very popular within the gambling industry.
The betting exchange business model allows for a much fairer and transparent betting experience for the punter.
There are less restrictions in general at a betting exchange. The gambler has much more flexibility when it comes to placing bets. In the past, you’d go to a bookmaker and be limited to backing the winner. At a betting exchange you can back and lay an outcome, essentially having the option of acting as the bookmaker if you wish.
You are also very unlikely to be restricted for winning too much at a betting exchange. The more you win the more the betting exchange makes in commission. It’s a win win for everyone.
Betting exchanges have created a new era of betting where the phrase, ‘the house always wins’, is no longer true. Instead of the bookmakers running to the bank with your losses, your money goes to another gambler. Whilst losing any money is still a bad feeling, it’s better going to another punter over a bookmaker! Well, I think it is…
To show how much more valuable a betting exchange can be over a bookmaker here is a video, created by Smarkets. It depicts how a gambler would be 32% more profitable if they were to place a £10 bet at a betting exchange on every winner at the 2017 Cheltenham Festival.
Overall there a quite a few key differences between a bookmaker and a betting exchange. Both of these platforms have their place in the gambling industry which is great for us punters. They bring out the best in each other.
What to Look for in a Good Betting Exchange?
When you’re looking for the best betting exchange there are a number of key things you need to consider.
There are around 150,000 new websites launched every day… Therefore there’s going to be a lot of rubbish out there. Some of this ‘rubbish’ may claim they’re reputable betting companies.
The Internet is amazing but, it’s very easy to make a company look like something it’s not. It is very important that you check the background of the company before having anything to do with them. If you’ve never heard of the company before, it’s best to check if they are a licensed gambling company. To do this check the Gambling Commission’s website.
With the number of physical betting shops decreasing, the online betting industry is getting ever bigger. More and more bets are being placed online. Therefore it’s important to choose a betting exchange with a brilliant website. The site wants to be easy to use and have a professional feel. If it looks dodgy, it probably is.
Does the betting exchange have a mobile app? More people are looking to place their bets on the go. This is made easier by having a mobile application. Again, check if it’s easy to use. Check what other people have said about the app in reviews.
Security is another consideration. This is harder to check but the site should definitely be built on a https network rather than a http. You can see this in their web address bar.
Number of Customers
Reviewing the number of customers is a great way to find out if a betting exchange is worth signing up to. This can be quite tricky to do but the liquidity is a great insight into whether the company has customers looking to place bets. Liquidity is quite an advanced concept in betting exchange terms and we cover this in a separate in-depth article.
Can you access live chat or some kind of customer support to get in touch with someone regarding any issues you might have? The reputable companies all have teams of people who are there to help. Whether that’s through a live chat portal, email or phone.
There’s nothing worse than not being able to find out why your bet was cancelled, for example.
This should be a key consideration when looking for the best betting exchange for your needs.
The majority of betting exchanges that are worth using have a number of alternative payment methods. These range from the common debit and credit card transactions to PayPal and Skrill.
It should be very easy to deposit and withdraw funds. If the company is trying to charge you to withdraw any money, run 100 miles. There may be a minimum withdrawal amount, for example £10, but there should never be a charge on withdrawing.
These are all incredibly important things to look out for when choosing the best betting exchange for your needs. Below is a list of the top betting exchanges which we believe you should consider using.
The Main Betting Exchanges
These four betting exchanges are very well regarded within the industry and you’ll have no problem using any of them. However, as with anything, they each have their own unique selling points which we’ll have a look at below.
Betfair are the oldest and largest betting exchange in the industry. They are also one of the best betting exchange companies out there.
Founded in May 1999, they’ve been in the game for a long time. Over the years they’ve built a huge customer base and have continually developed their services, striving to be the best betting exchange out there.
Betfair charge a commission of 5% however, this can be reduced through their Betfair Points Scheme. The more bets you place, the more points you get and the lower your commission rate is. Though this is a great system, in all the years that I’ve been betting I’ve never managed to considerably reduce this commission rate.
As you would have thought, the liquidity (amount of people looking to place bets) is the highest out of all the major betting exchange companies thanks to Betfair’s huge customer base.
Betfair offer a £30 free bet when you sign up and stake £10. You can make a guaranteed profit from this offer using matched betting.
Smarkets are considerably younger than Betfair. They were founded in 2008 by a team of investors and developers who wanted to bridge the gap between ‘financial trading principles and the online sports world.’
Since then, they’ve been growing at a rapid rate, chasing down Betfair as the leaders in the betting exchange market.
Smarkets charge an industry leading commission rate of just 2% on net winnings. Their commission is simple and great for us punters.
The liquidity at Smarkets is still very high. And this is set to continue as they gain more and more customers.
Smarkets currently offer a £10 welcome bonus when you sign up and stake £20.
Matchbook were founded in 2004. However, they have remained a smaller betting exchange in comparison with the other three in this list.
In the past Matchbook let us down by the limited amount of sport available. However, more recently they’ve incorporated more sports into their site which is great to see.
In terms of liquidity, they’re arguably slightly ahead of Smarkets but a long way behind Betfair. Their customer base is also continually growing.
Matchbook charge a commission rate of just 1.5%. However, this commission also applies to any losing bets you place.
Matchbook currently offer new customers £500 cashback in the first five weeks as a welcome bonus.
Betdaq were founded a year after Betfair in 2000. They’re seen in the gambling industry as the second biggest online betting exchange.
As you would imagine, they have a huge range of sports and other events available ranging from football to the winner of the X Factor.
However, liquidity can surprisingly be a problem sometimes, especially for the less popular events. I’m still amazed at this with such a sizeable customer base, their customers must not bet very often for some reason. Due to this liquidity problem, Betdaq have been seen as the secondary betting exchange to Betfair for a long time.
Similar to Matchbook’s sign up offer, Betdaq offer new customers the chance to get up to £1000 cashback in the first 30 days as a member.
The Best Betting Exchange
As you can see there a number of great betting exchanges out there, but which one is the best?
Overall, our favourite betting exchange and the one that we recommend our match betting members use, is Smarkets.
There are a number of reasons for this, the main one being that they only charge 2% commission. A reduction in commission over a whole year will make a huge difference and ultimately allow us to make more profit online.
Smarkets also provide a brilliant platform that is continually evolving with their growing customer base. I predict that they will be one of the leading players in the market in the not too distant future.
I hope you enjoyed reading this article and it’s helped you to select the best betting exchange for you.
Let us know your thoughts on betting exchanges below.