Exchanges Explained

You may have heard a lot about betting sites such as Betfair, BetDaq and Smarkets, there are a few others, these are betting exchanges and whilst still having the same basic principals of bookies, they do have some stark differences.

The idea of a betting exchange is that instead of a bookmakers where the bookmaker sets the odds for you to bet on, you are betting against other punters. The way that the exchanges work is that they give you, the punter, an opportunity to bet AGAINST something happening. If you consider it, this is exactly what bookmakers do when they offer you odds on let’s say a horse winning. They say to you that we bet this won’t happen, and that’s how it works on a punter to punter exchange.

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Now let’s take a look at an example to better explain it.

Frank lives in Newcastle and fancies Newcastle to beat Leicester this weekend, Frank takes a look at the odds and can see that Newcastle are about 4/1 (5 .0,) Frank heads to the exchange ( let’s assume an imaginary world where absolutely nobody has placed a bet yet just for the purpose of the example.) At he exchange Frank places a £20 bet on Newcastle to win and he selects odds of 5.0 or 4/1, bear in mind that most exchanges use decimals for better accuracy. Now what Frank is doing is asking the whole exchange if anyone wants to bet with him at odds of 5.0 for £20 on a Newcastle win.

Meanwhile Axel is in Sutton Coalfield and he sees this bet of Frank’s he says to himself “no way on Earth will Newcastle in” and decides to take Franks bet, so Axel digitally says to Frank, here you go mate, i’ll take your bet. Now… if Newcastle win, then Frank will win £100 back £80 profit and £20 original stake, but guess where that money comes from, you’ve got it Axel’s bank account. However, if Newcastle fail to win, Axel only wins Frank’s original stake as it was him who accepted the odds of 5.0, so Axel takes Franks £20 which leads me onto my next point.

All Winnings On Exchange Sites Are Subject To Commission

Don’t forget this when betting on exchange sites, most exchanges charge 5% but Smarkets only charge 2% and is currently the industry leader on this. Always bear the 2% or 5% in mind, especially if you are the one doing the backing. For example you may see odds of 4.0 on PaddyPower and then see 4.1 on Betfair, get a little excited at your odd finding abilities and place your bet, but once Betfair have taken their 5% then you end up with worse odds than you started with. If you are placing ‘lay’ or ‘bet against’ bets then unfortunately you cannot get away from the commission but it is still worth keeping in mind.

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Do The Odds Differ

This is a curious one and the honest answer is yes, and no. The truth is it depends on how you manage it in the main, most favourites and rank outsiders have similar odds on both bookies and exchanges but a great way that I found to tip the odds in your favour is this. Let’s assume you are betting on a football game on the Saturday, hit the exchanges on a Monday and throw up some higher odds on a draw, for example, in my experience, most people change their mind from Monday to Saturday and more often than not I see odds for a draw lower the closer the game gets. One thing to bear in mind is that when bookmakers first throw odds out, they are based on an algorithm of form, injuries, pressure of the game, history between two teams etc. etc. HOWEVER, as the weekend approaches, these odds are mostly dictated by which way the bets have gone. My recommendation would be to take a leaf out of the bookmakers, er, book and throw up some higher odds at the beginning of the week, if nobody wants to bet with you then you’ve lost nothing, if they do, then you could well be quids in.

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