Betting Exchanges For Beginners
Monday 8 March 2010
For the uninitiated, betting exchanges can seem daunting and complicated, but the potential rewards make the minimal effort required to understand the product worthwhile.
What is a betting exchange?
A betting exchange allows gamblers to bet directly against each other in a fixed-odds bet. Betting exchange customers can bet against each other on everything ranging from horse racing events like the Cheltenham Festival, to political and novelty markets. The vast majority of a betting exchange's business is conducted online, although customers can also place their bets over the phone.
What are the main differences between betting exchanges and the high-street bookies?
The main difference is that you will be betting directly against another person(s) when you place a bet on a betting exchange. The other main differences you will notice are as follows:
. Decimal Odds: all the odds are expressed in decimal format, and will include your stake. So, 3/1 is expressed as 4.0 and 10/1 is 11.0. To calculate your returns from a winning bet, simply multiply your stake and odds together.
. Back or Lay: You will have the option to 'back' a selection - just as you can with your bookmaker - OR bet against or 'lay' a selection if you wish, by offering odds against that selection winning to another customer. If you lay a selection and that selection loses, you keep the other punter's stake money. If that selection wins, you pay out at the agreed odds. For every matched bet there is a 'backer' and a 'layer'.
. In-Running betting: On Betfair you can continue betting on a horse race right up until the winner passes the winning post. This is something that traditional bookmakers cannot offer.
. Better Odds: You will notice that the odds available on betting exchanges are often better than those available with the high-street bookies, usually up to 20% better and often a lot more than this, particularly on outsiders.
How do betting exchanges make money?
By charging a commission on all winning bets. This commission varies, depending on how much you use a given exchange but in general new clients start at 5%. The lowest rate is 2%. You pay no commission on losing bets.
Next steps
Once acquainted with the basics of exchanges, the next step is to explore the more sophisticated aspects of betting such as 'arbing' and 'greening up' where profit can be guaranteed due to discrepancies and movements in betting markets.
Betting forums and a large number of books have been dedicated to an area that continues to grow rapidly.
