What is a betting exchange?
To put it simply, a betting exchange is just like a bookmaker, but with one key difference.
Instead of betting against a bookmaker, we actually bet against other people.
That’s why it’s called a betting exchange; people are exchanging bets.
How do betting exchanges work?
Unlike at a bookmaker where we bet that something WILL happen, at a betting exchange we have a choice.
If another user has bet that something WILL happen, we have the opportunity to match it, by betting that it WON’T happen.
What are back and lay bets?
There are two sides to every matched bet.
If we are betting for a particular outcome to happen, we are backing it.
If we are betting against a particular outcome to happen, we are laying it.
So, a back bet is a bet that something WILL happen and a lay bet is a bet that something WON’T happen.
It’s being able to bet that something won’t happen, that makes matched betting possible, as you can see in my matched betting guide.
Which betting exchange should I use?
Betfair are currently the biggest betting exchange out there. With over 4,000,000 registered users, they’re one of the biggest online gambling organisations in the world.
The Betfair Exchange is incredibly reliable and there are markets available for just about every sport you can think of. They’re also the best option in terms of liquidity, which I’ll explain in more detail shortly.
If you sign up using the link below, Betfair will give us a £20.00 risk-free bet to get us started.
Navigating the Betfair Exchange
The Betfair Exchange is user-friendly and finding your way around is really straightforward.
The above screenshot shows the Betfair Exchange homepage. Betfair also have a Sportsbook so be sure to click the Exchange tab on the main menu.
If we’re looking for a particular sport or event, we can find our way there using the menu in the left-hand sidebar. Alternatively, we can search for the event using the search box at the top of the page.
Betfair Exchange explained
Let’s take a look at the Match Odds market for a football match between Leicester and Everton…
As you can see, the market is split into two halves. The blue column represents the best available back odds and the pink column represents the best available lay odds.
So, we would use the blue column if we wanted to place a bet for something to happen and we would use the pink column if we wanted to place a bet against something happening.
Let’s say for example, I think Leicester will win the match, so I place a back bet for them to win.
You, on the other hand, don’t think Leicester will win the match, so you decide to place a lay bet against them winning.
Our bets would be matched; I would be backing Leicester and you would be laying Leicester.
The important thing to remember when placing a lay bet is that we are effectively playing the role of a bookmaker.
If our lay bet wins, we get to keep the backer’s stake.
If our lay bet loses, we have to pay the backer their winnings, an amount that is commonly referred to as our ‘liability’.
Our liability is simply the amount of winnings we have to pay out if our lay bet loses.
Our liability is always displayed when placing a lay bet and we must have enough funds in our account to cover this in the event that our lay bet loses.
How to lay a bet at Betfair
Laying a bet on the Betfair Exchange is really straightforward.
We simply find the selection we want to lay and click the corresponding pink button. So if we wanted to lay Leicester, we would click the 2.18 button…
Once that has been applied to our betslip, we just need to enter the amount we wish to lay (backer’s stake) and click ‘Place bets‘…
Once the lay bet has been placed, our potential profit or loss for the possible outcomes are shown on the left hand side…
As you can see, our liability for this lay bet is £11.80.
So, just to clarify here… we are betting against Leicester. If Leicester win, we’ll lose £11.80 to the backer. If Leicester don’t win (if they draw or lose), we’ll win the backer’s stake of £10.00 (minus 5% commission).
Betfair make their money by charging us a small commission fee on winning bets.
The last thing to mention on the subject of betting exchanges, is liquidity.
Liquidity is basically the amount of money that has already been staked on a selection.
The available liquidity is shown underneath the odds, as highlighted in the following screenshot…
So, as you can see, there is £3,813.00 worth of liquidity available for laying Leicester.
That means other users have already placed back bets totalling £3,813.00 on Leicester to win at odds of 2.18. So in theory, we can lay anything up to £3,813.00 and it will be matched instantly.
If we were to lay £100.00 against Leicester, our bet would be matched straight away and the remaining liquidity would be £3,713.00.
We just need to get into the habit of making sure that there is sufficient liquidity available before placing our lay bets, otherwise all or part of our lay bet will remain unmatched. Don’t worry though, this will soon become second nature.
Hopefully, you now have a better understanding of what a betting exchange is and how we can use them to profit from bookmaker’s offers and incentives!