Betting Exchanges

How Do Betting Exchanges Work?

It is important for customers to know exactly what they are getting into before placing a bet on an exchange. Although the sports markets displayed on exchanges are similar to those found on bookmaker sites, there are some critical differences that players must be aware of. First, betting exchanges display both back and lay options. Players have four options available to them, rather than the two options (back and lay) they are used to seeing on bookmaker sites. Second, betting exchanges do not necessarily have to act as a middleman between two customers who want to use opposite sides of the bet. Odds can be generated in a variety of ways, and they are most often found using either the bookmaker or the exchange as a reference. For these two reasons betting exchanges are different and often better for the end customer.

A betting exchange takes care of all the necessary financial aspects. It takes the stake from the punter backing a selection and the potential payout from the house. The money is held until the final result is known and then the exchange pays out accordingly. For example, if Arsenal had won, the punters would have received their bets and payouts. But if they did not win, the layer would have received their payout and gotten their stakes back. But where does the exchange make money? The exchanges charge a commission to the winning punters, which can range from 2% to 5%. This may seem overly complicated at first, but if you spend a little more time with the exchange, you'll see that it's really simple and straightforward.

Best Betting Exchange Sites

Betfair

OUR PICK Betfair Get £30 In Free Bets When you place a £10 bet on Sportsbook New Customer offer. Place a min £10 bet on the Sportsbook on odds of min 1/2 (1.5), get £30 in Free Bets. Rewards valid for 30 days. SMS verification required. Only deposits via cards will qualify. T&Cs apply. Please Gamble Responsibly Get Bonus

Betfair has long been regarded as the best betting exchange around, having launched in 2000. The exchange attracts an estimated 90% of UK punters who bet this way, although its 5% commission fee is one of the highest. Known as "Paddy Power Betfair" on the London Stock Exchange after a merger between the two betting companies, Betfair allows visitors to determine how much odds fluctuate thanks to an API system that they use very intelligently and integrated trading tools that are just as smart. They are licensed by the Gambling Commission, which means there are no problems with UK punters using their very decent platform, and they also hold a license from the Malta Gaming Authority.

Those who place bets on the Betfair Sportsbook earn points that can be redeemed to improve the already great commission structure at Betfair. Promotions at Betfair include a welcome bonus that gives new customers a £20 risk-free bet. Our Betfair review team found this exchange to be particularly attractive to football and horse racing fans. However, Betfair offers many other betting markets and the minimum bet on the Betfair exchange is only £2. Also, if you happen to make a bit too much profit on the exchange, watch out for the 2% premium charge that Betfair may take from your winnings. Otherwise, winnings are capped at 20% per week.

On the Betfair Exchange, punters can also enjoy live streaming of sport from around the world. Every week hundreds of events are available for Betfair customers to watch. They can also take part in live betting, which offers more options and changing odds than I have seen anywhere else. This makes sense as the Betfair interface is clean and even pretty if you like shades of blue and green. My only complaint is that the Betfair exchange allows you to fund your account with too few methods. If you are outside of the UK, the only way to get cash into your account is via bank transfer.

Pros:

• Numerous markets;
• Exciting back betting debate;
• Promotions still running;

Cons:

• 5% commission fee is high compared to some competitors;

Smarkets

OUR PICK Smarkets Trade On 0% For 60 Days Or Get A Refund Of First £20 Of Losses Use code COMMFREE to trade with 0% for 60 days OR code SMK20 to get a £20 / €20 cash refund. Min. £10/€10 first deposit only using Card or Instant Banking. Cash refund expires in 7 days. Full T&Cs apply. Get Bonus

The Smarkets exchange went live in 2008, making it one of the newest of its kind on the web. The Smarkets betting exchange quickly attracted the interest of punters by offering a commission of just 2%, which is one of the few areas where they beat Betfair. Licensed by the UK Gambling Commission as well as leading authorities in Malta and Sweden, our Smarkets review found a number of appealing features. Punters who place over 1,500 bets per month will see the Smarkets commission fee drop to just 1%, while this also applies to customers who place $1,000,000 worth of bets over the same period.

The sports betting exchange Smarkets is considered one of the best for lay betting, especially when compared to Betfair. High liquidity makes Smarkets very attractive to those looking to place bets, with all sorts of graphics and charts available to punters looking to make a decision. New customers at Smarkets can claim a welcome bonus of £10.

The Smarkets betting exchange offers a feature called "Trade Out", which is similar to the cash-out option available on selected markets at Betfair. In fact, Smarkets is a major threat to Betfair's dominance because its site works exceptionally well on both mobile and desktop devices, and it has even received rave reviews in the App Store. Unlike other betting brands, Smarkets isn't distracted by a sportsbook or casino games, which means its app is completely focused on the business of providing an excellent trading platform for punters. Pros:

• Excellent place to make your lay bets
• Welcome bonus of £10;
• 2% commission charge;

Cons:

• Fewer markets than the Betfair exchange;

Betdaq

OUR PICK Betdaq BET £10 GET £10 FREE BET 18+ only. Certain countries only. API/RDT customers excluded. Min £10 exchange bet at odds 2.0 or greater within 14 days of acc reg. Free bet valid on exchange for 7 days. Stake not returned. Depositing directly via bank card. No cashout. New customers only. T&Cs Apply. See full Terms & Conditions Get Bonus

Betdaq, founded in 2000, was acquired by Ladbrokes in 2013, giving them an estimated 7% market share in the UK and Ireland. All winning bets are subject to a 2% commission. Betdaq is one of the few betting exchanges to provide access to a public API. In certain markets Betdaq charges no commission at all, and its welcome bonus for new customers means they can also enjoy a month of completely commission free betting. Betdaq is an exchange, so it makes sense to first look at how this type of betting works.

There aren't many promotions at Betdaq at the moment. But if you place a bet of £10 or more on a virtual market, you can get a free bet of £10 with the promo code "V1010". So how do Betdaq and Betfair compare? They both have good liquidity. However, Betdaq offers fewer sports markets. In addition, since being acquired by Ladbrokes, Betdaq is one of the few exchanges that also has its own fixed odds platform. And they also offer trading tips. They're also a better deal in terms of commissions and rebates, as Betfair charges much more for the same service.

A big advantage of Betdaq is that there is no premium charge, meaning that those who win large amounts are not charged more, something that Betfair has in place. Betdaq has a mobile app that is easy to use and accessible to both iOS and Android customers. It works well on a variety of devices, and Betdaq's exchange site provides an easy and convenient user experience. Pros:

• No premium fee
• exclusive introductory offer of 0% commission for the first month
• the mobile application is available on both iOS and Android platforms;

Cons:

• Fewer sports markets compared to Betfair;

Ladbrokes

OUR PICK Ladbrokes GET £20 IN FREE BETS WHEN YOU BET £5 18+ New customers in the UK & Ireland only. Min £5 bet at 1/2 odds or higher within 14 days of registration. Excludes PayPal and some deposit/bet types. Get 4x £5 free bets (sports only, 7-day expiry, stake not returned). T&Cs apply. Get Bonus

The exchange at Ladbrokes, which has a long history as a traditional bookmaker, was opened to punters in the UK in 2013. The Ladbrokes Sportsbook is licensed by the Gambling Commission. Currently, there is no welcome bonus for new customers at the Ladbrokes exchange. However, you can claim £20 worth of free bets on their sportsbook site. The commission rate at Ladbrokes is 5%. However, punters who earn over 12,000 exchange commission points will see this rate drop to just 2%. These commission points are calculated based on a player's betting activity. The more you bet, the higher your potential to earn commission points. 1 exchange commission point is earned for every £25 bet placed on the Ladbrokes sportsbook.

Betfair competes with Ladbrokes on many levels when it comes to in-play betting and the live streaming experience. However, when it comes to overall sports coverage, Betfair cannot quite compete.

Trading at Ladbrokes allows customers to clearly see how the market is moving. Coupled with a detailed results page, this makes the process of choosing what to bet on much less risky. The Ladbrokes exchange site itself is easy to navigate on desktop and mobile, and there's an exchange app for iOS and Android that makes it even easier. Pros:

• A 2 percent commission rate is applied once the account reaches 12,000 points. The following lists detail how the points can be earned
• Numerous sports markets to choose from
• Live streaming on both mobile and desktop devices;

Cons:

• A welcome bonus for exchanging is not available;

Matchbook

Founded in 2004, Matchbook took some time to really get going and make any real waves in the room. They are now owned by Triplebet Ltd and it was really a major investment in 2011 that turned the ship around and saw them improve and get much better. The interface and user experience has been greatly improved recently and they are now attracting a lot of new customers mainly due to their very attractive and solid commission structure. They only charge 2% commission on net profits and 4% for everyone else. Also among their attractions are some of the best odds anywhere. In fact, their odds are better than what you would find on Betfair and that is one of the main reasons why they are growing so fast.

Unfortunately, there is no welcome bonus or matching promotions at Matchbook. However, since there is no sign up fee either, things tend to balance out at this bookmaker. The Matchbook sportsbook is licensed and regulated by the Gambling Commission. The sportsbooks offer notable features such as the three ways to contact customer support. Instead of an almost endless number of menus, you can choose between phone support, email support or live chat.

We also found a mobile app available for both iOS and Android users. However, unlike Betfair, Matchbook does not offer live streaming services to punters on their exchange. The Matchbook exchange site is one of the best around in terms of usability, with all markets and features easily accessible at all times. Those who have placed bets on the Betfair exchange in the past will quickly get used to Matchbook, with a number of similar features, including the blue and pink back and lay buttons. Pros:

• A 2% commission on net profits
• Completely redesigned exchange site
• Numerous sports markets;

Cons:

• No welcome offer;

Betting Exchange Vs Bookmaker

Betting exchanges offer better value than bookmakers and a wider variety of options because you can set your own odds. On an exchange, you can bet on the outcome of a sporting event, but you're betting against other users of the site, not against a house. This means that you're not limited in terms of odds as you are when using a site that operates more like a traditional sports book. Betting exchange users are effectively betting against each other, with some betting the event to succeed and others betting it to fail.

With bookmakers, the edge can be as much as 20%, which means that in many cases the odds offered are simply unfair. An exchange, however, is an entirely different animal. Its style is peer-to-peer, with markets dictated by the people who use them. As a result, wins are more likely to be profitable when compared side-by-side with the same bet placed at a bookmaker. That's just one of the reasons why an exchange is superior.

One of the disadvantages of betting exchanges is that they charge a commission. This can be as low as 2%. This means that it shouldn't affect your overall winnings too much, if at all. And if you make a net loss, you're off the hook.

Betting exchanges have other advantages as well. Many people who use them talk about the much greater number of betting options available. You can set your own odds and bets don't get canceled. All this, of course, makes betting exchanges a very attractive platform.

Top Welcome Offers

Matched Betting

Matched betting sites are used by punters in order to guarantee for a profit, with this strategy also requiring a bonus or enhanced odds offer. No-risk matched betting generally allows for a profit, no matter what the outcome of markets are, because of the bonus itself, rather than the price. Using the Betfair Exchange as an example, punters must place a back bet with a bookie of your choice, which will mean that you qualify for a bonus or free bet, whilst also laying on the same market on the Betfair Exchange. Having done so, punters will then have their free bet to play with. Next, find a sports market of your choice, which must have similar odds as on the Betfair Exchange. Place the bet using your bonus or free bet, as well as laying on the Exchange, meaning that even if the bet wins or loses, a profit will be made.

Comparison of Betting Exchange Commissions and Fees

When selecting a betting exchange, one of the most crucial factors to take into account is how its commission structure works. Betting exchanges make their money by taking a slice off the top of winning bets — your bets, if you're a winning bettor. They don't build their profit into the odds like traditional bookmakers do. So, even small differences in commission can really add up, especially if you're a regular or high-stakes bettor. For instance, if you were to consistently have a winning month with around £10,000 in winning bets, you'd be giving Betfair £500 for the same service that Smarkets would give you for just £200. Over a year, that's a huge difference — thousands of pounds in difference, frankly.

Here is a comprehensive contrast of the top exchanges, zeroing in not just on their commission rates but also on their concealed costs, charges for premiums, and loyalty payoffs:

In contrast to Betfair, which holds an unrivaled position as the market leader with the deepest liquidity and the biggest range of betting options, Pinnacle is far less well-known. But Pinnacle has established a solid reputation among informed players and in certain betting circles and for good reason. Pinnacle provides overall better value than Betfair does. Conversely, Smarkets and Betdaq attract price-sensitive bettors because they charge a flat 2% commission and have no premium charges. Matchbook occupies a middle ground, offering not quite the sharpest of odds but a sufficiently modern and well-designed interface. It lacks a bit of liquidity compared to Betfair, certainly, but still more than many of its other competitors.

Main point: For casual gamblers, the commission may not register on small bets. But for serious wagerers or those trading regularly, picking a low-comm exchange can mean the difference between being in the black and being in the red. Many experienced players open accounts on multiple exchanges, letting them compare odds and fee structures across platforms.

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Strategies for Using Betting Exchanges Effectively

Compared with traditional bookmakers, betting exchanges are much more flexible, and this makes possible a whole range of strategies that punters can use to get ahead. Exchanges don't just take bets; they operate as peer-to-peer markets where bets are offered and taken, and prices are found. In this dynamic environment, punters can use approaches that they couldn't even think of with a standard bookie, and with a suitable betting exchange, they can think like traders.

1. Arbitrage & Hedging

One of the most popular strategies for betting on sports is arbitrage betting. This involves taking advantage of the price differences between a bookmaker and an exchange. For example, if a bookmaker offers odds of 2.10 on a tennis player but the exchange has lay odds of 2.00, a punter can back the player with the bookmaker and lay them on the exchange. This locks in a guaranteed profit for the punter, regardless of the outcome. Hedging can also be used mid-event. This involves backing an outcome pre-match and then laying it once odds shorten to secure profit or reduce risk.

2. Odds Trading (Market Making)

Numerous professional wagerers utilize exchanges as if they were financial marketplaces. They "purchase" a result (back bet) when they estimate the odds to be excessively high, and they "sell" it (lay bet) when the odds drop. This betting strategy is especially popular for horse racing and football, where the odds fluctuate drastically throughout an event. Success demands superb timing, extensive market knowledge, and access to highly liquid markets. Betfair works especially well for this strategy, due to its myriad of offerings.

3. Matched Betting with Bonuses

Matched betting is a method with low risk that marries the free bet promotions offered by bookmakers with lay bets placed at betting exchanges. By backing a selection with the bookmaker and laying the same selection with the exchange, punters cover all outcomes and qualify for the free bet. When using the free bet, they again lay with the exchange, thus converting what was once promotional money into guaranteed cash. Matched betting is an activity many novices pursue, as it requires little in the way of sports knowledge yet offers seemingly reliable returns.

4. Long-Term Value Betting

Because exchanges mirror actual user demand, their odds tend to be sharper than those of traditional sportsbooks. But this very sharpness creates opportunities. If a bettor can pinpoint outcomes that are consistently mispriced—by, say, 5%—compared to true probabilities, he can make +EV wagers that, over the long haul, will yield a greater return than betting arbitrage or taking sportsbook promotions. That’s because those two methods are essentially risk-free ways of earning interest on your capital, while a +EV strategy is way more fun (and is what I, personally, do).

5. Specialist Niche Markets

Even though bookmaking companies concentrate on popular types of sports, betting exchanges are often places to find niche markets where the volume of money in play is low but the odds may be slightly wrong. People who have a good, solid understanding of a sport—whether that's football outside the English Premier League, darts, eSports, or some other game not often covered by bookies—can make bets on these markets and find themselves with long-term profits. As with any exchange, though, a lack of liquidity can slow things down.

6. Risk Management & Stop-Loss Discipline

Since exchanges permit both backing and laying, they can serve as a bankroll-preserving mechanism. Say you back a team to win a tournament outright, but halfway through the event, their odds have shortened dramatically. You can lay the team at a lower price to protect yourself from a loss that would have otherwise occurred had you let the bet ride till the end. This is a version of stop-loss betting, which professional gamblers have been using for years.

Back & Lay Betting

Wagering on a betting exchange is all about backing and laying, which punters must understand before getting involved. In simple terms, backing effectively means betting that a particular result will happen, with laying being wagering that it will not. Examples of the two options can be found below:

Back Betting:

• Backing Chelsea to beat Crystal Palace.
• Chelsea available at 1/2 for the three points.
• A win for Chelsea will see punters paid out at this price, plus their stake.

Lay Betting:

• Rather than betting on Liverpool winning the Premier League, a lay bet would be staking on anyone other than the Reds coming out on top.
• Those placing a lay bet are effectively acting as bookies.
• Unlike traditional bookmaker sites, exchanges allow for both back and lay betting.
• Many punters today bet using a lay betting system.

Advantages & Disadvantages Of A Betting Exchange

Advantages:

• Lay Bets – Unlike with traditional bookmakers, lay bets can be placed on exchanges, meaning betting on an event not occurring. As such, punters have a greater number of options for winning money on sporting events.
• Odds – Because you are betting against other punters, rather than an individual bookie, better odds can often be taken advantage of.
• Payouts – While some bookies will cancel bets, punters operating on a betting exchange will know that they will always receive winnings when placing successful bets.

Disadvantages:

• Choice – There are only a small number of regulated betting exchanges available to punters in the UK today.
• Bonuses – Those signing up at a betting exchange will not find as many as bonuses and other promotions when compared to online bookies.
• Limits – The amount that can be staked on markets at betting exchanges is determined by liquidity, meaning that the limits may not be suitable for those with higher budgets.

Bottom Line On Betting Exchange

Betting exchanges may not be a new platform, however they are still overlooked by a number of punters. However, an increasing number of betting customers are now signing up at sites such as Betfair, Smarkets and Betdaq, with the draw of increased odds, greater freedom and lay bets being extremely appealing. You should now understand exactly how back and lay betting works, including the strategies used by punters, so be sure to check out some of our recommended betting exchanges for yourself.

FAQ

Which Is The Best Betting Exchange?

Betfair is widely regarded as being the leading betting exchange available to punters in the UK, performing well when it comes to markets and odds. However, Smarkets, Betdaq, Matchbook and Ladbrokes also offer appealing platforms, so the choice is really yours.

Why Use A Betting Exchange Over A Normal Bookmaker?

Many have turned to a betting exchange due to the freedom in which such platforms offer. Both back and lay bets are available, something in which traditional bookmakers do not offer.

What Does Exchange Mean In Betting?

Unlike on a traditional bookmaker site, where bets are placed against the bookie itself, at betting exchanges, bets are made between punters. In effect, the exchange is between the two parties, with the site acting as an intermediary.

Which Betting Exchange Has The Lowest Commission?

Betting exchanges tend to set commission rates at anywhere between 2% and 5%, with Smarkets offering a standard charge of 2%.

Which Is The Best Betting Exchange For Backing With High Stake Liquidity?

Betfair, Smarkets and Betdaq are among the best exchanges for high stake liquidity, with betting on such platforms being appealing to those with larger budgets as a result.

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