How do betting exchanges work? A simple guide for beginners in 2020

Unlike with traditional bookmakers, punters are sometimes unsure of what betting exchanges are and how they work.

Whilst the popularity of betting exchanges has increased over the last few years, these platforms are not used nearly as much as traditional bookmakers.

One of the main reasons for this is that beginners and more experienced bettors are sometimes confused about betting exchanges and how they work. When you first get to the Betdaq exchange, you’re hit with a lot of information:

Betdaq exchange

Punters can, therefore, be hesitant to place bets at betting exchanges.

However, exchanges have some brilliant advantages over traditional bookmakers such as better value odds and the option of lay betting.

In this article, we’ll explain what betting exchanges are, how they work plus we’ll look at the benefits these platforms offer.

Let’s get started.

What is a betting exchange?

Let’s start right from the beginning, what is a betting exchange?

A betting exchange is an online marketplace which matches gamblers looking to place opposite bets.

This is the main difference between betting exchanges and traditional bookmakers. You are betting against other punters rather than the bookmaker itself.

How do betting exchanges work - Betdaq

Betting exchanges simply provide the marketplace and technology for punters to bet on. They don’t take on any bets as traditional bookmakers do. Instead, they match punters on the exchange.

How betting exchanges work

So how do betting exchanges work for the punter?

As we looked at above, when you place a wager at a betting exchange, you’re betting against another gambler.

Therefore, there must be two sides of the marketplace. Someone looking to back an outcome and another looking to bet against that outcome.

This is where back and lay betting comes in.

Back betting is the traditional way of gambling. You bet on an outcome which you think is going to happen. This is the type of bet you’d place at a bookmaker. If the outcome happens, you win the bet. If it doesn’t, your bet loses.

What about lay betting?

Lay betting is the exact opposite of back betting. So now you’re betting against an outcome happening.

This format of betting is one of the most popular features of a betting exchange as it’s not possible at traditional bookmakers.

Here’s an example to help explain.

Let’s say that you think Manchester City will beat Chelsea. You could place a traditional bet, backing Manchester City to win or you could place a lay bet against Chelsea.

Manchester City vs Chelsea

The lay bet is essentially saying that Chelsea won’t win. If the match ends in a draw your lay bet would also win as Chelsea don’t win.

For a successful match on the exchange, you need someone on both sides of the market like the example above.

What’s in it for the exchange?

You might be wondering what’s in it for the betting exchange.

Unlike bookmakers, the exchange makes money by charging a small commission on the player’s net winnings. The commission varies but ranges from 2% to 5%.

So the betting exchange makes money whether your bet wins or not.

Benefits of betting exchanges

When compared to bookmakers, exchanges have a number of advantages such as:

  • Better value odds
  • The option of lay betting

Better value odds

Due to different models, you’re more likely to find better prices at an exchange meaning more value for you.

Bookmakers build their profit margin into the odds meaning the prices are generally less efficient for punters. Instead, exchanges charge a small commission.

However, betting exchanges are unable to offer promotions and price boosts on their odds as the market determines the value.

Football betting free bets

The option of lay betting

As we’ve already seen, the other main benefit of an exchange is the option of laying bets.

Whilst it’s uses are less common, lay betting is essential to certain strategies such as matched betting where punters are able to make a guaranteed profit from bookmakers free bets.

Downsides of betting exchanges

Whilst betting exchanges provide great prices and the option of laying bets, they also have their downsides:

  • A lower number of markets
  • Sometimes nobody to match your bets

A lower number of markets

Compared to traditional bookmakers, the number of markets available is lower. However, unless you’re placing bets on niche markets most exchanges will be fine.

Nobody to match your bets

More importantly, the lack of liquidity can make placing your bets difficult. What do I mean by liquidity? Liquidity refers to the amount of money waiting to be matched on a given market.

If there’s nobody to back your lay bet, the liquidity is zero and you won’t be able to place your bet. For the majority of popular sports like football and tennis, the liquidity won’t be a problem.

However, for markets with less popularity, smaller betting exchanges may struggle with a lack of liquidity.

Best UK betting exchanges

So which are the best UK betting exchanges? Here are three options to consider.

The most popular platform is Betfair however other companies such as Betdaq and Smarkets also offer brilliant platforms.

Check out this article for more information on the best betting exchanges.

An important tip when placing bets at an exchange is to check that your bets have been matched. As it’s a marketplace, this is very important.

You don’t want to log in to your account after watching your bets win only to find that your best wasn’t matched in the first place.

How betting exchanges work

I hope this article has helped you understand how betting exchanges work and how they differ from traditional betting sites.

In summary, the main difference with betting exchanges is that you’re betting against other gamblers rather than the bookmaker.

Whilst betting exchanges may be confusing at first, you’ll soon get the hang of how these betting sites work and you’ll be able to maximise your value in no time.

Why not get started with Betdaq today?