What is a Betting Exchange?
A betting exchange is a platform that allows people to place bets on the outcome of various events. It differs from a traditional bookmaker in that it allows users to bet against each other, rather than against the bookmaker.
This means that users can act as both a traditional punter and a bookmaker, setting their own odds and taking bets from others.
Some users make money by trading Betfair odds between users.
How Do Betting Exchanges Work?
Let’s run through a scenario to explain how betting exchanges work…
- A user places a bet on an event, offering odds to other users. For example, a user might offer odds of 2.0 (decimal, or 1/1 in fractional format) that Manchester United will win a football match.
- Other users can then choose to accept these odds and place a bet on Manchester United to win. If Manchester United wins, the original user pays out the winnings to the other user. If Manchester United loses, the original user keeps the bet money.
- Alternatively, another user can offer different odds on the same event. For example, they might offer odds of 3.0 (decimal, or 2/1 in fractional format) that Manchester United will lose. If a user accepts these odds and Manchester United loses, the original user pays out the winnings to the other user. If Manchester United wins, the original user keeps the bet money.
Overall, betting exchanges allow users to have more control over the bets they place and the odds they receive, as they can choose to accept or offer their own odds. They also typically charge a small commission on winnings to cover their operating costs.
The First Betting Exchange…
Betfair was the first well-known betting exchange. It was founded in 1999 by Edward Wray and Andrew Black, and launched in 2000.
Betfair was the first betting exchange to go live, and it has remained a major player in the industry since its launch. Betfair allows users to place bets on a wide range of events, including sports, politics, and entertainment — providing there is enough betting liquidity.