A betting exchange is a platform that allows users to bet against each other. Instead of placing your bet against a bookmaker, you place it against another person.
You can play the role of ‘customer’ and bet that something WILL happen or you can play the role of ‘bookmaker’ and bet that something WON’T happen. Being able to bet that something won’t happen is what makes matched betting possible.
How do they work?
Betting exchanges can seem a little daunting at first glance, but there’s really nothing to worry about. They’re actually very similar to bookmakers.
At Betfair, the blue column shows you the best available back odds. Just like placing a bet at a bookmaker, placing a back bet on Man Utd would be betting on them to win.
The pink column shows you the best available lay odds. This is simply where you play the role of bookmaker. Placing a lay bet against Man Utd would be betting that they won’t win.
So, there are two parts to every matched bet on a betting exchange. You have one person betting that Man Utd WILL win (back bet) and another person betting that they WON’T win (lay bet).
How do they make money?
Bookmakers make their money by offering odds that are lower than the true odds of an event occurring; commonly referred to as their overround. This practice ensures that in the long-term, no matter what happens, they will make a profit.
Betting exchanges, on the other hand, take on no risk whatsoever as it’s just people betting against each other. So, how do they make their money?
They do so by charging a small commission on winning bets, usually between 0-5%. It’s basically their fee for providing a platform on which you can trade bets.
Which is the best betting exchange?
If you want to start taking money from the bookies, you’re going to need a betting exchange account.
When it comes to choosing an exchange, it’s very much Betfair v Smarkets. They’re head and shoulders above the rest and are both perfectly viable options, with a few subtle differences.
Betfair are the better option if you’re new to matched betting. They’re the bigger brand and are offering new customers a £20.00 risk-free bet. Simply place your first bet on the exchange and if it loses, Betfair will refund your stake in cash up to £20.00.
Smarkets are a solid option too, with a £10.00 bonus available to new customers. Simply place your bets and your first £10.00 worth of losses will be refunded.
Whichever exchange you choose to get started with, you’ll need to sign up to both if you want to maximise your profits long-term.
Betting exchanges can be a tad confusing to start with, so don’t worry if things seem a little unclear at this stage.
Being able to place lay bets at a betting exchange is the key to the entire matched betting process, so it’s definitely a concept that’s worth getting your head around.
Things should become clearer in the next guide as I walk you through your first matched betting offer!