Updated: Mar 28, 2021
Welcome to our fourth article in the Introduction to Betting series, where we introduce betting exchanges.
If you’ve placed a bet before then the chances are that it was through a bookmaker. You visit a website (or go into a shop if you’re old school!), and they provide a list of odds on various outcomes for you to choose from.
Betting exchanges work slightly differently however, as unlike a bookmaker they do not set the odds themselves. The exchange acts as a platform for users to bet for or against each outcome while they continuously match off opposing bets against each other – effectively like a stock market for bets.
The biggest betting exchange by far is Betfair, which offers a wide a variety of Eurovision markets, matching many millions of pounds/euros in bets every year. Smarkets is another betting exchange that also offers many Eurovision markets. Betdaq and Matchbook are also betting exchanges, they rarely offer Eurovision markets.
If you’re thinking “this all sounds very complicated” then don’t worry, since the Betfair Exchange is so widely used you can generally treat it just like a bookmaker - by logging on, finding the odds available, and placing a bet. It’s just that in this case you are placing your bet against a fellow punter instead of against 'the house'. The way in which Exchanges operate however does open up more opportunities for your betting.
Advantages of using an exchange
You can choose your own odds (though be aware they may not always find a match)
You will generally get fairer odds than at bookmakers (especially for outsiders)
You can bet against an outcome (this is known a ‘laying’)
You can trade (trading can allow you to lock in profit before the event by betting for and against an outcome at different times)
You can also automate your betting using their API (though this is only advised for very serious users)
Reasons still use bookmakers
Bookmakers are more likely to give overly generous odds or react slower to information
Exchanges charge commission on your winnings (you should take this into account if you are comparing odds)
Bookmakers should always have odds on offer for events that they cover, but there may not be money available on an exchange for small events (such as national selections)
Bookmakers generally provide an easier user experience if you are new to betting
As you can see exchanges can be really useful, especially if you want to get a bit more serious about your betting – it is where professional gamblers do most of their betting. If you are just starting, however, I would advise that most of your activity should still be with bookmakers while you get used to things.
If you’re interested in learning more about how to get started on Exchange betting let us know and we will dive into this topic further.
Gamble responsibly: BeGambleAware