What are Betting Exchanges ?


Betting exchanges online were only introduced a few years ago, by British firm Betfair, and have grown so rapidly, that they now, not the bookmakers, set the prices for most sporting events. The bookmakers have to consult and respond to what is happening on the exchanges. Even if you have never had a bet on the exchanges, you should be very happy about their existence. A visible example is the prices on offer in British horse-racing, whereas at one time it was most unusual to see an outsider at odds of more than 33/1, but now many runners are of ten returned with starting prices of 66/1+, this is entirely due to the exchanges. Not so obvious is the day to day tightening of percentages on all betting events which benefit all punters. Despite this you can still get far better odds on the exchanges, typically 20% better according to the exchanges themselves.

Betfair is the dominant betting exchange, with Betdaq a good alternative. There is very little competition – is this a bad thing ? Absolutely not. If you think about it, the best exchange is going to be the one with the most punters, both bettors and layers. The exchanges don’t actually do anything! They just open the doors, maintain the site, but it is up to the people who enter and participate who create everything themselves.


You can back anything on the exchanges, you can lay anything on the exchanges, and you can back and lay the same selection. In fact this is the best approach, if you can back a horse (we will use horse-racing in most examples, but could be any sport) at let’s say 12.00 (11/1) and then lay a horse at lets say 9.00 (8/1), you are now in the happy position of not being able to lose. Lets say you bet in $10 units (you can have much smaller, or larger bets if you so wish), so if the horse wins, you will win $110, but of course you have to pay the person who bet the horse at 9.00 with you. In this example you win $110 and pay $80,meaning a profit of $30. If the horse loses it has cost you nothing, you bet $10, you layed $10, and in effect you have had a free bet! Don’t worry about trying to keep track of your bets, the screen will automatically show you what your liabilities are for each horse – green for profit, red for loss. Also bear in mind that the exchanges have to make money somewhere, and they charge commission on winning bets, nothing on losing bets. The commission is usually 5%, but this figure falls as you accumulate loyalty points. For presentation purposes decimals are used for prices, this allows the minutest of price changes to be catered for, but it is awkward at first for punters who are used to fractional odds, but you soon get used to adding stake into prices displayed. Some examples – 10.00 = 9/1, 14.00=13/1, 4.5=7/2, 2.1=11/10 etc.


Sometimes you are going to take a price, with the view to laying at lower price, only to be dismayed to see the price drift alarmingly. What to do now? Well don’t panic, not yet anyway! You have got three choices. Firstly I assume you fancied the selection, so maybe just let it run, after all just because it drifts, it does not mean it can’t win. Secondly you may want to lay it at a bigger price than you backed it. In other words, hope it gets beat and you finish level. If it does win you will have to pay the difference between the price you backed, and the price you laid. This is the worst option – it is infuriating to pay out money on a selection you fancied originally. Thirdly, you can also back horses (again i refer to horse-racing, but applies to any sporting event) in running, during the race. This I feel is the best option. But what price do you offer? You can dive in and out of the race offering different prices as the event unfolds, or you can offer high price or low price and leave it. Well should it be high or low? It depends! If you offer a high price (by high I don’t mean higher than you backed it) you are more liable to get a buyer, as most horses, or teams, at some time get into contention sometime during an event. So by laying high you could get out of trouble and finish level. However finishing level is not too exciting, so offer low price in running. If you take this option you can turn a bad position into a decent win, even if your selection loses – just so long as the selection flatters sometime during the event. For example you back horse, $10 at 9.00, and it drifts – wait for the off and offer at about 3.75 for $20. It doesn’t have to win, just be a challenger at some time and hopefully someone will take it on. If it wins, you win $80 and pay $55 = $25 profit. If it loses, you lose $10, and collect $20 = $10 profit. If the selection never shows, well no one is going to take up your bet, and you have done your money this time, but at least you went down fighting.

Bets that have already lost, but still available. Sometimes the odds available may look unbelievably good, if that is the case there is probably a good reason. Maybe somebody in the know has access to information that you don’t. It can be anything – change in going, team struck down with flu virus, injury that may mean player may not even participate, a non trier, and on the very rare occasion of corruption. So if a fancied selection drifts alarmingly, beware, there may be a reason for it.

Digital television is delayed – often you will see say 1000 (999/1) appear suddenly on the screen, this is because a horse has just fallen, or team scored etc. If you are watching on digital TV you will not be aware of this fact for maybe 2 seconds. Not long, but still time enough for transactions to take place.

Arbitrage between exchanges – forget it. This is when you can back on one exchange and lay on another. I have no doubt that if you work at it you can make a small profit, but it will be small. The exchanges always converge pretty quickly, and the gaps will always be tiny. The only way to get “value” perhaps is to note a tightening of price on the exchanges, and back selection with a bookmaker – if the price stays solid or reduces further, the bookmakers odds will almost certainly have to constrict. These tactics are exactly opposite to what used to happen just a few years ago, when you would back on the exchanges knowing that their prices would have to converge with the bookmakers prices. This is no longer the case, the exchanges, that is the punters themselves now set the prices.

You haven’t the time to sit at computer all day? To get full value out of exchanges, you really need to be at that blasted computer screen for an unhealthy amount of time, but as we all know it can be very tiring, and a bit boring. However you can still play the exchanges. Remember you set your own prices, and if nobody wants to play with you, the bets just expire, with no cost to you at all, no matter how many bets you leave on the exchange. So,if you are horse player,or sports bettor – get in early – as soon as the markets open. You can then leave your bets open, say overnight for horse-racing, and maybe several days for other sporting events. Your tactics should be to leave MANY MANY bets – all at, what appears even to yourself ridiculously optimistic prices. Believe me, you will be amazed at some of the bets you leave that are taken on – remember you may leave 30 or 40 bets for lets say, tomorrows racing, and if 3 or 4 are layed you are already in the driving seat. You can either let them run at fabulous odds (recommended!) or you can lay bet to other punters now, either with a view to covering your bet or making definite profit now. You can of course use the same tactics for laying bets.

The bigger the odds the more value you get. It can be hard to grasp, but you get better value the bigger the odds. The movement on the favourites is minute – there are legions of buyers ready to pounce as soon as it moves. The bigger the odds there are of course fewer buyers, this can lead to volatility on a grand scale. Volatility is what the shrewd punter likes most of all. It is not unusual to get odds of approaching 200/1 for a horse that may be showing just 33/1 in the morning racing press and starting price. This happens because bookmakers do not participate in this end of the market, they are watching, and backing the fancied horses which are the ones that will inflict the damage to them. Also the big hitters usually back the fancied horses to big stakes and lay the outsiders to small stakes. So both bookmakers and big players concentrate on the fancied horses, this leaves room for you to operate successfully. Most races are won by fancied horses, but you only have to win very rarely at these odds to show a very healthy profit. Also remember once you have this huge price, you can lay your selection in running and still make a profit whatever the result.

These are just basic tactics to be employed on the exchanges, and you will develop your own tactics as you get comfortable with the systems.However make no mistake the exchanges are the best thing to happen to regular punters – ever .