Betting Exchange Guide

What is a betting exchange?

The Betting exchange system is based on users exchanging sports bets. An individual offers a sports bet in the same way as a bookmaker (by setting the odds and a maximum amount that another punter can wager on the bet) and another person takes on the bet. The most famous betting exchange is Betfair.

Generally, the odds offered in Betting Exchanges are slightly higher than for single bets. The drawback is that it is not possible to include them in multiple bets. Put into practice, here’s a simple example seen from the perspective of punters and providers of bets on the Arsenal – Liverpool match.

For the punter

A punter wants to stake £50 on Arsenal. He thus examines the odds offered by bookmakers and discovers that they are offering odds of 1.9 on his team to win. With this in mind, he takes a look at the bets offered on a betting exchange and sees that a provider is offering £50 at odds of 2.2 for the same final result.

• In the event of an Arsenal win --> The punter wins 50 x 2.2 = £110 instead of 50 x 1.9 = £95 if he had placed a bet with the bookmaker.
• If Arsenal does not win --> The punter loses his £50.
• No more money is lost on a bet placed on a betting exchange than with a bookmaker.

For the betting provider

The betting provider is convinced that Liverpool will win. He or she therefore offers a bet on Arsenal winning or drawing at slightly higher odds than those offered by a bookmaker for the same result (otherwise, there’s no point in a punter buying the bet from them). He or she offers £100 on 1X at odds of 1.2 and someone buys this bet based on the belief that Arsenal will win the match or that it will be a draw.

• In the event of a Liverpool win --> The bet provider will win £100 because the buyer of his or her bet will have lost everything (having bet on an Arsenal win or draw)
• If Liverpool does not win --> The provider will lose [(£100*1.2]-100] = £20 (the liability)

The “liability” on a betting exchange (the money that can be lost) is equal to the [(stake x the odds) – the stake]. In fact, our provider staked £20 at 5 on a Metz win, whereas this same result was quoted at odds of 4 by the “traditional” system used by bookmakers such as Bwin and Betclic.

Our verdict on Betting Exchanges

The betting exchange is a complex product intended for experienced punters. It offers them a way to benefit from better odds than those offered by bookmakers.