What is a betting exchange? - Matched Betting For Dummies

What is a betting exchange?

If you are getting into matched betting you need to be familiar with the betting exchanges. The exchange allows us to place lay bets which are the bets we place to bet against the bookies.

A bookmaker will alow you to place back bets only. For example: betting on Arsenal to win, betting on Andy Murray to win, betting on a score line etc etc. This is great and we need this as well but this is quite straight forward and most people are familiar with back bets. Lay bets are the opposite of back bets but they are no more complicated once you get into them.

Very simply a lay bet is betting against the outcome, so if our back bet is Arsenal to win,  our lay bet is Arsenal not to win. The draw is covered by the lay bet so no matter the outcome of the game we have covered all potential outcomes by placing a back bet and a lay beet.

Example. Arsenal vs Manchester United

  • Back bet – Arsenal to win
  • Lay Bet – Arsenal not to win

Potential Results

  • Arsenal Win : Our back bet wins and our exchange bet loses
  • Draw: Our lay bet wins and our back bet loses
  • Arsenal lose: Our lay bet wins and our back bet loses

So no matter what happens we having a winning bet and a losing bet and will roughly break even. This is the basics of a matched bet.

There are other uses for the exchange as well. We can trade on the exchange. If we place a back bet or lay bet at the exchange we can trade out of the bet for a profit if the odds move in our favour. Of course this is a gamble as the odds may move against us meaning we will lose money.

Many people will back a horse and then lay it in play to make a profit. Often a poor horse can be backed for huge odds but if it goes to the front in the race we can trade out for a nice profit. Doesn’t matter if the horse ends up coming last we have already traded out for a profit. This is advanced gambling though and should only be attempted once you understand what you are doing and the risks involved.

Who are the betting exchanges?

There are a few out there, the main one is Betfair. There is also Smarkets, Matchbook and Betdaq. Each exchange charges a commission on winning bets. We have to take this commission into account when matched betting. Betfair charges 5% and Smarkets 2%. However Betfair offers far more markets and because there are more people using Betfair there is usually more money in the market meaning we can get larger bets on.

Because the exchanges make their money from commission they are quite happy to welcome matched bettors and you will never get gubbed or restricted from the exchange. You aren’t actually betting against the exchange company but you are betting against other punters. All the money floating around in the exchange comes from other punters just like yourself.

Liability

Liability is what we will potentially lose on a lay bet. Unlike a back bet where we lose our stake with a lay bet we lose the liability. That is because we are essentially acting as the bookmaker. That means you can lose more than your bet but as long as you have backed at the bookie as well your losses will be covered by the bookie bet winning.

This also means we have to have enough money in our exchange account to cover the liability. If we don’t we won’t be able to place our lay bet.

Which Exchange should you use?

Either Betfair or Smarkets. The others are often lacking in liquidity meaning it’s hard to get our bets on. If you are a complete beginner go for Betfair. Even though they charge more commission most tutorials are written for Betfair and there site is much easier to use. Once you are comfortable you can start using Smarkets for some of your lay bets to benefit from the lower commission rate. You will always need money in Betfair though as a lot of lay bets are not covered by Smarkets.

Become familiar with how they work before you starting placing large bets and always place your back bet before you lay. Because you can potentially lose much more money at the exchange you need to make sure you get your back bet on first. If for some reason you layed first and then couldn’t get a back bet on because the event had started or you find yourself restricted you could potentially lose a lot of money. So always back and then lay.

By | 2017-09-25T09:26:05+00:00 September 25th, 2017|Categories: Uncategorized|0 Comments

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