Betting Exchange Definition

Betting exchange works almost the same as stock market, but instead of trading shares you trade your bets. Rather than betting against the bookmaker, you bet against fellow players, with the betting exchange acting only as intermediary.

You can place a ‘back’ bet – betting on something happening or a ‘lay’ back – betting against something happening. If the market moves in the right direction, you can lay the bet you have previously backed or vise versa, just like buying and selling shares, making sure you win some money regardless of the outcome.

Betting exchange offers numerous advantages to conventional bookmakers, such as no-limit betting and very sharp odds.

Example

You place a £100 ‘back’ bet on Borussia Dortmund to win German Bundesliga at odds of 4.00 (3/1) before the season starts and then place a £120 ‘lay’ bet on Borussia Dortmund at odds of 3.00 (2/1), risking £360, after they notch up a couple of wins in a row.

Should BVB win the title you will earn £400-£360=£40 and if they fail to win the title, you will earn £120-£100=£20.

Betting Exchange Pros and Cons
Pros
  • No limits
  • Very sharp prices
  • Trading
Cons
  • Commission is paid on all winnings
  • Big odds fluctuation