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What Is a Betting Exchange? A Guide

People are always looking for creative new ways to place bets on sports to minimize risk and raise their chance of hitting that jackpot.

So when the “betting exchange” was first invented at the turn of the new millennium at Oaks at the Epsom Derby, people thought it would revolutionize sports betting. Although it hasn’t quite made bookmakers go extinct, it is still a very popular method with betters. 

So what is a betting exchange?

In this article, we’ll tell you everything you need to know about how exchange betting works and how to use it.

Let’s dive in.

What Is a Betting Exchange?

Exchange betting (also known as peer-to-peer betting) is placing bets against other individuals instead of a bookmaker.

They’re a great alternative to traditional online betting sites and have gained a lot of popularity since their inception in 2000. However, many newer betters can get intimidated by betting exchanges because the concept might seem confusing. 

But exchange betting is one of the best ways to give yourself the best odds on sports as well as give yourself a better chance at winning. 

Let’s take a look at how betting exchanges actually work. 

How Does Betting Exchange Work?

As we mentioned earlier, there is no traditional bookmaker involved in an exchange — you just bet directly against other “players.”

In an exchange, there are two players involved in a bet.

The first player is the person who places the “back” bet. This process is similar to how you would place a bet with a normal bookmaker. You simply select the outcome of the desired sport and choose what’s at stake.

The second player is the person who “lays” the bet. This person is the one betting against the outcome.

As a simple example, let’s look at a football match happening between Spain and Portugal. Let’s say you choose Portugal to win. 

Instead of just backing a bet on Portugal to win, you can lay a bet on Spain not to win. Whatever you choose, the platform will match you with another player on the betting exchange.

How Does Lay Betting Work?

Let’s continue with the example we were using earlier. When you go to a betting exchange like Matchbook, you can find a wide variety of games and matches happening across the world.

Once you choose a match that you like (Spain vs. Portugal), you’ll be able to see two colored columns to the right of the match that shows the odds for backing and laying. On Matchbook, the blue column is for backing a bet while the red column is for laying a bet.

If you want to bet on Spain losing the game, you would select the red column for Spain. You can then choose what you’re willing to stake. 

It’s almost like you’re the bookmaker in this situation. The “stake” is how much you’re willing to accept as a bet. If you win, that’s the amount you’ll win. So if Portugal wins (or it ends in a draw), and you accepted a stake of $50, you’ll win $50.

But there’s more to laying a bet as the bookmaker. You’re also liable for paying out winnings if Spain wins the game. For our example, if the odds are 2.2, you would be responsible for paying out $60 for a stake of $50.

We call this your liability. When you input your stake, it will automatically calculate your liability (so don’t worry about needing to do the math).

The betting exchange will handle all the money involved. The second the wager is agreed upon, they’ll take the stake from the backer and the possible payout from the lay bettor. If the selection loses, the layer is refunded the payout and receives the backer’s stake.

Technically, there isn’t a limit to the stakes or odds that you propose. Although it’s possible to lay bets different from market value, it won’t be automatically given. The further away your bet is from market value, the harder it will be for your bet to be backed. 

If you make an outrageous bet, it will take an outrageous person to accept it.

Lastly, it’s important to double-check that your lay bet has been backed by other bettors before the game starts. If no one backs it, your bet won’t be valid.

How to Use a Betting Exchange

Most betting exchanges that are run on websites work very similarly to their sportsbook counterparts. The first thing you’ll need to do to get betting is open an account and deposit funds to make bets with.

Once you log in, you can see several sports that are covered as well as the available betting markets. Search around for the market you’d like to bet on and hit the red column for lay betting and the blue column for backing (in Matchbook).

The main difference when it comes to the process is that you’re betting against another person rather than a bookmaker, and you can actually choose your own odds.

What’s Better: Betting Exchanges or Bookmakers?

The main reason most people like exchanges over bookmakers is the ability to lay bets and “play as the bookmaker.”

Another advantage of betting exchanges is the prices are typically better as well. When you place a bet with a bookmaker, you usually have to account for the bookmaker’s profit margin as well.

More experienced bettors are able to calculate these lower prices to guarantee a profit by using strategies like laying off bets or acting as an arbitrage.

For example, let’s say you backed the Los Angeles Rams to win the Super Bowl at the start of the season. Then they go on to make it to the playoffs. Of course, at that point, the odds of them winning the Super Bowl will be much lower — so you can lay them at a certain bet to guarantee a profit, no matter what the outcome is.

This would take away some potential profit, but you would have eliminated all risk of losing money. This is called trading. It’s where you bet and lay on the same market and make a profit no matter what.

It can also be easier to place big bets as opposed to normal bookmakers who might shy away from accepting riskier bets.

Betting exchanges aren’t without their downsides, though. 

There are fewer markets to bet on. And because you’re playing against other bettors, you’re never guaranteed to find somebody to lay your bet.

You also can’t usually place accumulator bets on betting exchanges. These are also known as parlay bets. This is where one bet has any number of events that need to happen for a single bet to win.

For example, you could make a parlay bet on the Green Bay Packers, Baltimore Ravens, and LA Rams to all win in one week. If any one of those teams lost, you would lose the parlay bet. But if all three won, you’d take home a big prize.

Want to learn more expert betting strategies? Check this sports betting masterclass.

How Do Betting Exchanges Make Money?

Betting exchanges take small commissions on winnings, usually around 2% to 5%, depending on the platform. It’s similar to a poker room taking a rake in exchange for allowing players to play safely and securely in their room.

Because of this, it’s important to factor this fee into your bets. Even though the odds are better, you should still compare it to a traditional sportsbook to see what helps your wallet more.

Tips and Tricks for Exchange Betting

Like any other platform, there are certain strategies that can help you win more. There are tons of experienced bettors who make a lot of money in sports betting on exchanges, but it takes a lot of skill, patience, and commitment.

Here are four tips that can help you on your exchange betting journey:

1. Don’t Only Use Betting Exchanges 

There are plenty of advantages and disadvantages of both betting exchanges and traditional sportsbooks, but there’s a time and place for both of them. Learn to diversify and use each for the right situations.

2. Always Search for the Best Option

Always consider what the best value is before placing a bet. We mentioned earlier that although some of the odds look better on betting exchanges, they take a commission fee that could even out your payout or even makes it worse than a traditional betting site.

Another example is that in some circumstances, it could be better to back many selections rather than just laying a single bet.

3. Be Wary of Laying a Bet at High Odds

Laying a bet means you have to pay out the agreed odds. If you lay a bet for an unlikely selection, then the odds are going to be very high. This means you’re risking way more than you stand to win. 

4. Learn Exchange Betting Strategy

Keep learning and applying new betting exchange strategies! It’s a completely different world than traditional betting and will take time to learn. 

Key Takeaways

Hopefully, this article has answered any questions you may have had regarding “what is a betting exchange?” 

Although it might not be the “death of the bookmaker” like it was originally advertised in 2000, there’s no denying that exchange betting has been revolutionary and profitable for the betting world.

Whether you’re a casual punter or a serious sports bettor, a betting exchange is a great platform to start learning from. 

If you want to start learning how to make winning picks in a FREE betting course, hit this link today!

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