Betting exchanges have revolutionised gambling over the last few years. The concept is simple and this page gives a simple explanation of how betting exchanges work. Each gambler or 'bettor' can lay as well as back events, so gamblers can now act as the bookie.
Back: When you back a selection (an individual, a team, horse, dog or other) you are betting that it will win. This is just like betting with normal bookies or sportsbooks.
Lay: When you 'lay' a selection, you are the bookmaker. You are taking the betting stake and hoping the selection loses.
Choose odds: There is always a choice of what odds to accept. If you want better odds than are currently available, you can place an order for a better price.
Take a look at the odds before a game or a horse race and you will see them change as betting exchange clients back and lay their bets. The odds often improve nearer to the off, as the volume of money being matched increases.
Privacy: Your privacy and the confidentiality is maintained as nobody ever knows who they are betting against.
Guarantee a profit whatever the outcome: Betting exchanges also give you the opportunity, in certain circumstances, to make a guaranteed profit. The concept is the same as an "arbitrage" in share trading or spread betting. The opportunity arises in two scenarios: 1) When you lay a selection and the price subsequently gets longer. 2) When you back a selection and the price subsequently contracts. The concept is best explained by an example:
A horse is layed at 1.67. You have taken a £500 bet to lose £335 if the horse wins. The horse subsequently drifts to evens (2.0 on Betfair betting exchange). Now you can back him on Betfair at 2.0 staking £400 and you will guarantee a profit whatever happens. In this example you make £65 profit if he wins and £100 profit if he loses.
It is never wrong to take a guaranteed profit. After all, If you could do this on every transaction you would never lose.
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Betting Exchanges Explained
