What is a betting exchange?
A betting exchange is a marketplace where bettors bet against each other rather than against a bookmaker, with the exchange matching the two sides and charging a commission on net winnings.
At a bookie, the bookie sets the price and takes the other side of your bet. On an exchange, another customer does. The exchange is just the middleman, a bit like a stock market for sports outcomes.
That gives you two options on every selection:
- Back it: bet that it will happen, same as at a bookie.
- Lay it: bet that it won’t. You play the bookie. See lay bet.
Because prices are set by users competing with each other, exchange odds are often a little better than a bookie’s. The exchange earns its money from commission, a percentage of your net winnings on a market. Losing bets pay no commission. Rates differ by exchange and by country.
Example
You back a team at 3.00 with a $20 stake, and the commission rate is 2%.
- Team wins: gross profit is $40. Commission is 2% of $40 = $0.80. You keep $39.20.
- Team doesn’t win: you lose your $20. No commission.
So the true price you got was about 2.96, not 3.00. Always compare odds after commission.
Watch out
- Liquidity. A bet only exists if someone takes the other side. Big football matches have plenty of money waiting. A lower-league game on a Tuesday may not, and your bet can sit unmatched.
- Availability. Exchanges are common in the UK, Ireland and parts of Europe. They’re restricted or absent in many countries and in most US states.
- Layout. The grid of back and lay prices looks scary at first. It takes ten minutes to get used to.
Exchanges are also the engine behind matched betting and a handy way to hedge.