| Betting
Exchanges
To place bets on a bet exchange has become quite
popular, due to the fact that you bet against other
punters, not against a bookmaker. YOU can choose to be
either a bookmaker (offering odds on an event for others
to bet on), or to bet as an ordinary punter (you place
bets on an event where others have offered the odds). In
order to do this effectively, you need a place to gather
all punters and "bookmakers" in one marketplace, the bet
exchange. This works just like a stock exchange (a
meeting place for traders). Actually the bet exchange
works very much the same way. The bet exchange websites
have software which will keep all the "lays" and "backs"
in order.
The common terminology is
"lay" and "back" (or, to make
it easier: "sell" and "back"). If you decide to act like
a bookmaker, you will "lay" an offer out on the bet
exchange for others to bet on. This is the way bookies
normally do it. They "lay" bets out on their websites,
for others to bet on (or "back").
As you would expect, the bet exchange website will
charge a certain percentage in return for their service.
This percentage can vary, but well known bet exchanges
charge about 5% on the winning amount (winners must pay
5% off their winnings). This is of course considerably
lower than the bookmakers, who operate with a 10% +
profit margin.
DO NOT BET BEFORE YOU UNDERSTAND THE GAME
Make sure you have read and understood the rules before
you start acting as your own bookmaker. A betting
exchange is a company who do not accept bets themselves,
but they do instead offer the facilities for other
punters to place bets with each other. If you fancy a
shot on being a bookmaker, then you should definitely
give this concept a try.
A
betting exchange will remove the profit margin factor,
which very often will favour the bookmaker. In sports
betting exchanges you will generally get better odds,
due to this fact.
But beware that you may lose quite a bit of money if
you act as a bookmaker, and that you therefore need to
have some funds in your account to cover all your
potential loss when making a "lay-order".
Another thing is that, even if you don't want to act as
a bookmaker (don't want to "lay" bets), you can act as a
normal punter, and bet on the offers others have "layed"!
And the best thing: you'll most likely get better odds
on a betting exchange than with a bookmaker, because on
betting exchanges, there is no profit margin calculated
in the odds presented.
Most betting exchanges operate to around a 101 per cent
book on most high-profile events, which compares
favourably to a typical 105-110 per cent overround when
comparing the best prices on fixed-odds firms on most
football matches.
The back/lay prices on a particular event are determined
by punters themselves - players can attempt to place a
bet at any price they wish so the equilibrium is
effectively created by supply and demand.
Because commission is only charged on net profits on a
single market, exchange players are able to hedge
positions and benefit or suffer from swings in the
market.
If a punter places a bet on Arsenal at 5/6 and the price
moves into 4/5, he or she can lay off their bet, locking
in profit, but if the price drifts to 9/10 to close off
the book would involve accepting a loss.
Alternatively, if the punter changes his or her mind for
whatever reason, he or she can manoeuvre the position on
the market without being affected by the margins of
standard bookies.
Exchanges tend to offer prices in the European decimal
format.
Decimal odds incorporate the stake into the price, so
evens becomes 2.0 (1/1 plus the single unit stake) and
2/1 becomes 3.0 etc.
Example
To take a specific example, let's say you wish to oppose
Tiger Woods in The Open and the exchange shows a current
'to back' price of 2.98 and a 'to lay' price of 3.0.
If you are willing to trade at those prices you would
have to be prepared to lay at 3.0, or 2/1. This is
effectively the same as backing 'the field' at 1/2, so
to win �10 you would have to risk �20 by laying at 3.0.
If Woods wins, you lose �20; if he fails you win �10.
Of course you could ask to lay at a shorter price, say
2.96, in which case to win �10 you would only need to
risk �19.60.
However, unless the price on Woods shifts downwards the
price would not be matched and no bets would be placed.
Most exchanges bet in-running on most televised events
so this gives us the opportunity to find value as the
event is in progress.
In the above example if Woods bogeys the first two holes
his price is likely to lengthen, perhaps to 3.6, in
which case you can hedge your position by 'backing back'
at this price. Backing Woods for another �10 at this
price would net you �26 were he to win, so you are
locking in profits.
It is imperative that inexperienced users double-check
their stakes and liabilities before confirming their
bets, and we definitely advise that small stakes are
used at least until players are familiar with the
concepts.
However once players have got used to playing the
markets it is clear they can be very rewarding - indeed
big players who have been capped by the bookmakers can
bet with virtually unlimited stakes on the exchanges.
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