What is a betting exchange?
Betting exchanges are very similar to bookmakers, there’s just one key difference. Instead of betting against a bookmaker, at a betting exchange we bet against each other.
This means that if someone has bet that something will happen, we can match it by betting that it won’t happen.
Being able to bet that something won’t happen is the key that makes matched betting possible.
How do betting exchanges work?
It’s important to understand that there are two sides to every bet.
If we are betting for a particular outcome, we are backing it to happen.
If we are betting against a particular outcome, we are laying it to happen.
Let’s pretend we’re the only two people using the betting exchange and 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.
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 bet is now matched; I am the backer and you are the layer.
You, as the layer, are effectively playing the role of bookmaker here. If Leicester win the match, my back bet has won and you would pay me my winnings. If Leicester don’t win the match, you would keep my back stake.
The higher the back odds, the more we stand to win from our back bets (our potential profit).
The lower the lay odds, the less we stand to lose from our lay bets (our liability).
Which betting exchange should I use?
My personal recommendation is that you sign up to Betfair.
Betfair are currently the biggest betting exchange out there, by some way.
With over 4,000,000 registered users, they’re one of the biggest online gambling organisations in the world. They actually process more transactions on a daily basis than all of the European stock exchanges put together!
The 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 cover in more detail shortly.
It’s also worth mentioning that your first exchange bet with them is risk-free, up to a maximum of £20.00, which is refunded in cash!
Betfair Exchange homepage
The Betfair Exchange is user-friendly and finding your way around is really straightforward.
The above screenshot shows the Betfair Exchange homepage. Betfair also run 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.
How to lay a bet at Betfair
Laying a bet on the Betfair Exchange is really straightforward. We just need to follow these three steps…
…We need to click on the pink box that corresponds to our selection. For example, to lay Leicester, we would need to click the 2.18 box.
…Once applied to our betslip, we just need to enter the amount we wish to lay and click ‘Place bets’.
…Our potential profit or loss for the possible outcomes are shown on the left hand side.
By placing a lay bet against Leicester, we are betting that they won’t win.
The figures tell us that if Leicester win, we’ll need to pay the backer their winnings of £11.80. If Leicester don’t win, we get to keep the backer’s £10.00 stake.
You may have noticed the monetary values underneath the odds, as highlighted below…
These figures tell us how much has been staked at those specific odds. This is generally referred to as ‘liquidity’.
Say, for example, we want to place a lay bet against Leicester at odds of 2.18. We can see that other users have already placed back bets totalling £3,813.00 on Leicester at those odds. This means we can stake anything up to £3,813.00 and it will be matched instantly.
If we were to place a lay bet of £100.00 against Leicester at odds of 2.18, 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 become second nature in no time.
Hopefully, you now have an understanding of what a betting exchange is and how we can use them to profit from bookmaker’s offers and incentives!
I’ll now take you through a fully worked example of how to complete a welcome offer from start to finish!