The Betting Exchange has transformed the gambling industry over the last 20 years, allowing the punter – to put it simply – back or lay against a certain outcome. It offers the punter more flexibility to hedge their bets in running, potentially cutting losses or guaranteeing profit regardless of outcome. Exchanges will generally show better prices and value than standard bookmakers, as it is other punters who are offering those prices, but Betting Exchanges tend to take a small commission on winning bets as a result.
The first Betting Exchanges were formed around 20 years ago, with Flutter and Betfair joining forces in 2001. The former ceased to exist in 2002, with the latter going on to become the most prominent Betting Exchange in the world, despite several others providing competition in recent years. Betdaq was formed in 2000 by Celtic FC shareholder Dermot Desmond and has since been bought by Ladbrokes (now Ladbrokes Coral) while other exchanges include Matchbook and Smarkets.
As opposed to a traditional betting site, Betting Exchanges work in decimals instead of fractions. Odds tend to differ from 1.01 (1/100) and 1000 (999/1) with punters matching each other’s bets at the opposite odds. So, in theory, if someone has backed a horse at 2.5 for £10, the other player will have laid (backed to lose) for £15. The outcome will be the backer winning £15 as well as his £10 stake, or the layer winning £10 as well as his £15 stake. This is all before commission, which is usually anywhere between 1 and 5% of the winnings.