Betting Exchange Explained
Betting Exchanges operate as a medium between punters, matching those willing to lay bets with those more traditional punters who want to back a winner.
Betting Exchange Explained : They make a profit by charging a commission on winning bets and have totally altered the betting market as we know it in the last ten years.
The most successful exchange is Betfair. It is very simple to open and fund an account, provided you are over 18 of course and live in a country where their use is not legislated against.
The biggest event in Betfair history occurred in September 2012, when Andy Murray won the US Open against Novak Djokovic, with over £60million matched between punters.
For smaller punters Betfair has given them huge value, with a minimum bet of only £2 and the chance to play into 100 per cent books (before commission) rather than the traditional bookmakers higher margin offerings.
Rather than playing against a bookmaker, the punter is playing against another punter with an opposing view, and no locked in margin of profit on any event. If he has a good opinion he can profit.
The punter is unlimited in the size he can place bets in, rather than with traditional bookmakers where the winning accounts are usually quickly heavily restricted.
Funds within exchanges are secure and guaranteed.
Lock in a profit/trading
By laying back his original bet, a punter can secure a "no-risk" profit regardless of the outcome, provided the market has moved in his favour. i.e if you have £100 on Liverpool at Evens pre-match and they score first and are 1-0 up, you can lay £100 back at 1.33. This means that even if Liverpool win you still win £67 but if they do not you lose nothing.
The exchanges have revolutionised in-running betting. i.e prices are available throughout any match and again without any "in built" margin. The bookmakers as a result now offer constantly updated prices on bigger events, although their prices are usually a few points underneath the Betfair price.
Commission and Premium Charges.
New customers winning bets are subject to a 5% charge and this is quite substantial over time and can make long term profitability very hard to achieve, while the most successful Betfair clients have in recent times been subjected to a form of "super-tax" of up to 70%.
Becoming an "action-junkie".
The race by race mentality that the exchanges encourage means many punters find it impossible to keep their discipline and end up playing in every race or live event. It can become like an addictive fruit machine particularly to the novice punter.
Lack of liquidity.
Much of the smaller, untelevised sports tend to be in very small size and is mainly "seeded" by robots or the exchanges themselves. It has become virtually impossible to get a bet of any size matched on certain events unless it is very close to the "off time". Horse racing for example in midweek is virtually non existent in terms of bets matched in the mornings and the decline is continuing month on month.
The Perfect Market.
Pre-exchanges, the more astute punters had opinions about prices that they could profit from. Now withBetfair providing a perfect tissue to the entire betting industry it is very hard to find many errors in the market that used to be commonplace. Betfair is basically a perfect meeting of all the brains within the betting industry, and it is often difficult to find any edge in the prices, particularly in football for example where all the form/teams etc are well known and in the public domain.
Although it is possible to self regulate i.e limit maximum amounts of deposits per day/month, many punters find themselves playing far bigger than they have ever done before, particularly with those who are not used to laying or losing large sums. There is little doubt that the "free" Betfair market has proved a tempting honey pot that many have found a very expensive adventure.
The betting exchanges and principally Betfair have completely transformed the betting landscape. The apparently low margin product now forms the tissue on which all other bookmakers base their prices, and has given birth to a huge generation of successful professional punters.
However, there is little doubt that the novice punter would find this a hornets nest if attempting to play into these shark infested waters, particularly on certain markets where the shrewdies certainly hold all the aces i.e horse or greyhound racing.
However, for the smaller £10 or £20 punter, the exchanges offer fantastic value for their hobby, and they are certainly likely to lose a lot less playing into zero-margin books.
To the new punter just setting foot into the world of betting, open a Betfair account but limit yourself immediately to "maximum" deposits per week of something you are very comfortable with and can afford to lose. That way, as you gain experience of using the "machine", you can find areas of strength in your betting and specialise there, avoiding the temptation to bet on everything that moves!