What Is Exchange Betting

Exchange betting is unique in that it eliminates the need for a bookie. While placing bets on sports through a bookmaker is still a common practice, betting exchanges have grown in popularity since they were first made available. Here, we examine the operation of betting exchanges and compare exchange betting and conventional sports betting.

Key Points

– Most sports bettors do not know how exchange betting works.

– Bettors can wager on a team/player to lose on a betting exchange.

Traditional Sports Betting vs. Exchange Betting

The fundamental idea behind exchange betting is very simple. In many ways, it is similar to conventional sports betting in that you are still placing a wager on the outcome of an event. There are a few key differences though.

The absence of a bookmaker is the primary distinction. Any bets you place are actually made with other bettors. On a betting exchange, you have two main choices. You can accept bets that others are offering at odds they choose, or you can propose bets for others to accept while playing oddsmaker yourself. 

You can choose between backing and laying bets, which is the second major difference. When you back a wager, you are placing a bet on that wager to win. When you lay a selection, you are placing a bet on the wager to lose. 

Laying picks with bookmakers is typically not an option, so this expands the universe of possible bets. Instead of predicting who will win, you can earn money by correctly predicting who will lose.

The method by which you actually place your bets is the only other significant distinction between traditional and exchange betting. 


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The Operation of an Exchange

Betting exchanges are essentially websites where you can propose bets you want to place and see the bets being proposed by others. Even though each exchange on the internet uses a different software platform and has a different appearance, they all function essentially the same.

To get started on an exchange, bettors open an account just like they do at an online sportsbook. With an open account, bettors can then have access to all the active betting markets. 

How It Works

Here’s what an online exchange might look like. Here are some options from a golf tournament listed on the exchange.

PLAYER BACK LAY

Rory McIlroy +490 ($158) +420 ($38)

Tiger Woods +1400 ($15) +1550 ($25)

Dustin Johnson +1650 ($28) +2000 ($51)

Let’s say you like McIlroy in this tournament. You want to back him. At +490 odds, you can place a maximum bet of $158 on McIlroy. You can bet less if you like, but those are the best odds you can get on McIlroy.

If a bettor decided to place the max bet on McIlroy, a win would payout a total of $932.20, which includes winnings of $774.20.

The right-hand column displays the best odds for betting against each selection. For example, if you want to bet that Tiger Woods loses this tournament, you can bet a maximum of $25 at +1550 odds. That’s not a bad return if Woods loses – $387.50.

Laying a Bet

When you lay a bet on a betting exchange, the entire liability is deducted from your account upon placing the bet. In the case of betting against Woods, $412.50 (the stake plus the winnings) would be deducted from your account.

Remember, there is at least one bettor on the other side of this bet. If Woods wins, then you must pay out at the agreed-upon (+1550) odds. 

It is wise to lay bets at exchanges on those events with lower odds. Higher odds mean a higher stake that gets taken from your account when you place the bet. You get it back if you win, plus your stake.

If you didn’t like any of the bets available on the board, you can propose a bet. Maybe you like Johnson to win and propose odds of +1200. Other bettors on the exchange would then have the option of jumping on the other side of your bet.

Advantages of Betting on an Exchange

The ability to lay as well as back bets is the single biggest advantage of exchange betting. This generates revenue opportunities on the most profitable sports that are simply not available when using a conventional bookmaker. 

When betting on a selection to lose, it is frequently much simpler to find a winning wager than when betting on a selection to win.

Another huge benefit of betting on exchanges is that you frequently receive better odds than you would from a bookmaker. If you regularly place bets and win a sizable portion of them, the better odds can have a significant impact on your overall profits.

The final major benefit of using exchanges is a significant one for knowledgeable bettors who consistently generate profits. It makes no difference to the exchanges who wins or loses because they take a small commission on all winning wagers. 

A bookmaker, on the other hand, will lose money to a knowledgeable bettor and frequently limits or closes the accounts of consistent winners. At an exchange, this doesn’t happen.



Cons of the Betting Exchange

Using exchanges has a few drawbacks as well, but they are relatively minor. The biggest disadvantage is that if no one is willing to take the opposite position, you might not always be able to stake as much as you want on a particular selection. Unless you plan to regularly stake very large amounts, this is unlikely to be a major issue.

Because bookmakers will always be around, it’s unlikely that exchange betting will ever completely replace traditional sports betting. But it is a great substitute, and many gamblers would profit from using it.