Betting exchanges, commonly referred to as open market betting, are the new kids on the block in the sports betting arena, but how are they different to traditional bookmakers and which one should you be placing your bets on?
While sportsbooks like Ladbrokes and William Hill have earned a household reputation on the high streets back at home, or around the world as some of the best-known online sportsbooks in the UK, betting exchanges are catching up quickly.
If you put the word betting exchanges into a search engine, you’ll find a number of articles from die-hard sports bettors touting it as the savior of the market.
So what exactly is the difference between the two and why should you be considering betting exchanges?
Choose your betting opponent
Top betting exchanges and sportsbooks:
• Betfair is one of the biggest betting exchanges out there and is wildly popular with sports betters for its flexibility and cash out plan.
• Ladbrokes is one of the household names in the sports betting realm, offering a wide range of games and even has its own sports TV.
• BetVictor is a popular sportsbook offering a wide range of games the world over from American football to motorcycle races.
When you make a bet at a bookmaker, you’re betting against the bookie itself. This means that traditional bookmakers call the shots when it comes to the odds and can even change the weight of the money you’ll win or the opinion on the outcome.
Betting at a bookmaker can also mean that they have a say in whether they will let you bet or not, and may even pose restrictions on successful gamblers. Often winning successfully at a bookmaker requires some insider information.
At a betting exchange, there is no bookmaker, simply an intermediary that lets gamblers bet against each other. The money made by betting exchanges like Betfair and Betdaq come from the commission made off the winnings.
The above reasons are why betting exchanges have been so successful. The betting exchange gives successful gambler more freedom to bet, where they won’t be under restriction to gamble, unlike traditional bookies.
Because the open market betting model functions on commission, the odds are generally better than what you’d find in a conventional bookmaker.
Odds in the favor of betting exchanges
Your traditional high-street bookmaker will price up a market on an event and offer the odds on an outcome, which can still change with the weight of the money bet on the event or the bookie’s opinion.
Also, your betting choices at a bookmaker are rather limited. You can bet for your horse or team to win, and sometimes you can make an each-way bet in events like horse racing.
An each way bet means you could place half of your stake on a horse to win, whereas the other half can be bet on the horse to place. This means that you’ll see some kind of return if your horse comes in the first three places.
However, with a betting exchange, you have the opportunity to lay a horse or a team. This means you increase your odds by taking the position of the bookmaker by betting on a horse to lose, for example.
Let’s compare the two betting mediums using the example of a horse race. At a traditional bookmaker, in a simple race with 8 horses, you place a bet on the favorite to win, you have a 1/8 mathematical chance of winning.
However, if you lay the same horse, where you bet on it to lose, your chances of winning now go up to 7/8, since a betting exchange means you get to bet against other gamblers and not the bookmaker.
For the same reason, you can also bet for the horse to place. Unlike each-way betting, you can simply just bet on the horse to come in the first three places. This means that if the horse places, you’d see a better return than an each-way bet at a bookmakers.
When you compare the average odds you’ll find at a betting exchange on a number of games and races with a bookmaker, the odds are usually around 20% better than at the bookmakers, but it is important to bear in mind there is 2-5% commission at a betting exchange.
First time or novice bettors might have difficulty in processing what the odds mean at a bookmakers, which are always displayed in confusing fractions, a betting exchange adopts the more user friendly decimal system.
To calculate the odds at a traditional bookmaker, you need to divide the fraction and add one, then multiply it by the stake to calculate your total return. Whereas decimal odds just mean multiplying your stake with the number to get the return.
At a traditional bookmaker once you’ve placed your bet it’s pretty much sealed in stone. However, a betting exchange will still allow you to bet in running.
So if the race is already running, you can still place your bets mid-race if you see a horse that is doing well.
It’s even possible at some betting exchanges like Betfair to cash out on a bet mid game or race.
Say you’ve placed a bet on your favorite football team to win, and mid-match they’re not doing well. As the odds change in the game you can lock your bet, which means you can take a profit or limit liability.
In a football match, you place a bet for a team to win and that team does well, then the odds increase and the cash out option will give you the chance to cash out any time in the game.
But if you think the other team could strike back, you can still cash out and secure the profit already made in your bet.
And it runs the other way. Your team is losing and there is a chance you’ll lose your entire stake. You can cash out before you lose your entire stake to limit liability, where exchange Betfair even offers the option on its mobile betting platform.
While bookmakers and betting exchanges offer players a chance to place bets on sports matches and races, the difference between the two stop there.
To sum up, the difference is simple, since a betting exchange means playing against other players, whereas traditional sports betting means playing against the bookmaker.