Betting exchange guide
Welcome to this betting exchange guide. Let’s find out how you use a betting exchange in matched betting.
Exchanges and bookmakers
Traditionally, a bookmaker (layer) accepts a bet from a customer (backer). Betting exchanges are different – they are a website for customers to back and lay bets between each other.
Exchanges make money by charging a percentage commission from the winning backer or layer in a betting market.
Exchanges have revolutionised the betting industry, allowing customers to find value odds and to act like a bookmaker themselves to lay bets.
The four main betting exchanges in the UK market are Betdaq, Betfair, Matchbook and Smarkets.
Each has its own strengths, with Betfair possibly offering the widest range of markets, whilst Smarkets are innovators, and Matchbook are strong on American sports.
How does an exchange work?
Decimal odds: A traditional bookmaker displays odds as fractions like 7/2. These odds do not include the backers stake. However, a betting exchange shows odds in decimal format, which includes the backers stake.
To convert fractional odds to decimal odds, take the first figure and divide by the second figure, then add 1.
To convert 7/2 to decimal odds:
- a). 7 divided by 2 is 3.50,
- b). Plus 1,
- c). equals 4.50.
See the Ace Odds guide to calculate fractional and decimal odds.
Backing and laying
There are two sides to every bet:
- a). Betting for an outcome is backing.
- b). Betting against an outcome is laying.
This is the Match Odds market at Betfair for Barcelona versus Inter.
The blue column shows the back odds.
The pink column is the lay odds.
We have two opposing viewpoints in the betting market – the backer and the layer.
The backer: thinks Barcelona will win, so they place a back bet on Barcelona, hoping that a lay bettor will match their bet.
The layer: thinks Barcelona will not win, so they place a lay bet on Barcelona.
The two opposing views mean the bet is matched between the backer and the layer. The possible outcomes are:
- If Barcelona win: the backer wins and the layer has to pay the backer the winnings.
- If Barcelona do not win: the layer keeps the back bet stake.
Alternatively, a customer might decide to back Inter to win at 6.2. Higher odds mean the backer stands to win more from the back bet (potential profit), whilst the layer stands to lose more (potential liability).
Conversely, when laying at lower lay odds, the layer stands to lose less (the liability).
Laying at an exchange
How do I lay a bet at a betting exchange?
The image below shows the Match Odds market for Slavia Prague versus Dortmund.
Backers and layers are betting against each other on who will win the match.
On the lay side, there is £1345 available to lay on Drotmund at odds of 2.06 (and £1081 at 2.08, £665 at 2.10 and so on). This is called the liquidity.
Click on the pink box to lay Dortmund at 2.06.
Dortmund will appear in your betting slip.
Enter a £10.00 lay stake, click “Place Bets” and finally “Confirm“.
You stand to lose £10.60 if Dortmund win. This is your liability.
You have layed Dortmund in the Match Odds market. This is a bet against Dortmund to win.
The possible outcomes are as follows:
- If Dortmund win: the layer would pay £10.60 winnings to the backer.
- If Dortmund do not win: the layer would keep the backers £10 stake (minus commission of 5% equals £9.50). The exchange charges a small commission on the winning lay bet.
Liability and liquidity
Backing £10 on Slavia Prague to beat Dortmund at 3/1 (4.00) gives a £30 potential profit. When laying the role is reversed, to make £10 profit the layer needs to risk a liability of £30.
Liquidity means the amount of money available to back and lay in a betting exchange market. High profile events like Champions League football have lots of liquidity, whereas less popular markets have less liquidity.
Before placing a matched bet, check that there is enough lay liquidity in the exchange market to successfully match your bet.
Betting exchanges are a key part of matched betting. If you have placed a back bet (“bought a bet”) with a bookmaker, you can also place a lay bet (“sell your bet”) to cover your position in the betting market and for risk free matched bets.
The facility to lay a selection is key to taking advantage of free bets and bonuses. Take the time to familiarise yourself with the concepts of backing and laying, exchange odds and liquidity at betting exchanges.
That wraps up this betting exchange guide. Look out for more matched betting content here at MatchedBettingZest.com