Betting exchanges are a fairly recent development in the online betting world and have completely changed the way people gamble online. Betting exchanges have introduced a new method to gamble online cutting out the traditional bookmaker by creating a platform for individuals to bet against each other. The main advantage of this is that the odds at a betting exchange are on average 10 – 20% better than they would be at a traditional bookmaker.
Betting exchanges allow an individual to become a bookmaker and ‘lay’ bets, offering odds on an event happening (much in the same way a bookmaker will). This therefore is the essential tool for matched betting as explained here.
Currently there are a various betting exchanges on offer but only a handful worth joining. These are listed towards the bottom of the page with a brief description.
Betfair are currently the dominant force within the betting exchange market after starting back in June 2000 along with an exchange called Flutter.com which is no longer running. There are also other fairly popular exchanges currently running such as Smarkets and Betdaq but none have the liquidity of Betfair and therefore struggle to compete. Liquidity is the key factor for a betting exchange and without it the betting exchange will struggle and not make any money.
Betting exchanges make their money by charging commission, this is calculated as a percentage on winnings for a particular market so it is in the betting exchanges interest to produce as much activity on a market as possible.
Unlike some online bookmakers betting exchanges do not limit an individual betting on an event, the only limit is the amount of money available on the market (this is set by the liquidity of the market). The odds available on a betting exchange are usually better than those offered by a bookmaker even taking into account the commission charged by the exchange.
The main exchanges
Betfair – Currently the market leader with the highest turnover of bets placed. They charge commission between 1 – 5% of your net winnings, this is not as bad as it sounds as the odds are consistently better.
Wbx – One to keep an eye on as it seems they clearly want a piece of the betting exchange action and are starting to gain market share quickly during the early part of 2007. Ceased to operate as of 16th March 2015.
Mansion – A US facing exchange and previous sponsors of Tottenham Hotspur FC. The exchange offers 0% commission and for that reason should not be discounted however odds are often not as good as others.
Betmate – Very similar to Betdaq and shares the same interface and look. Ceased to operate on 31st March 2011.
Ibetx / Bettor.com – Fairly new to the betting exchange market and one to watch in the future.
Smarkets – One of the main contenders to Betfair and Betdaq.