Since the first sports betting operators launched their online platforms, the gambling industry has been growing at an astonishingly rapid pace. Some of the sportsbooks gained world renown due to their unwavering dedication to delivering services of the highest quality. Subsequently, betting exchanges emerged and supplied bettors with new opportunities. Much like sportsbooks, they are gaining traction very quickly.
How many times have we witnessed our friends discussing a forthcoming football match, enthusiastically arguing a football team is surely going to lose? Traditional sportsbooks won’t let punters bet against a certain outcome, however, betting exchanges welcome that option. With the rise of betting exchanges, one may think that sportsbooks would suffer losses, however, that is not the case, since both have their benefits and shortcomings.
Betting Exchanges are platforms designed for users to bet on the outcome of different sports, political, and entertainment events. Compared to traditional sportsbooks, they offer punters a similar betting environment, however, a few differences distinguish them. At a betting exchange, bettors have the chance to back and lay outcomes, whereas, at traditional bookmakers, they can only back outcomes.
Yet another substantial difference between both types of online betting platforms is the way they make a profit. While bookmakers generate revenue by building in a profit margin to the odds they offer, betting exchanges gain their proceeds by charging commissions. Both approaches work differently and we will see how this affects the process of betting. The current publication aims to deliver information on exchange betting, the concepts of backing and laying a bet, as well as the main advantages and disadvantages.
Betting Exchanges Explained
Betting exchanges are peer-to-peer networks, where instead of betting against the operator, punters are matching bets from other punters. A punter can submit a bet for a certain amount they are willing to wager. Once submitted, it becomes an unmatched bet in the system. If another betting exchange user accepts the bet, it becomes active. In case it remains unmatched, the betting exchange voids the bet, and punters get their stakes refunded to their accounts, with no commission payable. At a betting exchange, punters assume the roles of either backers or layers, depending on the side of the wager they want to be.
Betting exchanges act as agents between users who would like to take opposite sides of a bet. They handle the funds involved in each bet, taking the stakes from backers and the potential payouts from layers. In case a selection wins, backers’ stakes are returned, along with the payouts coming from the layers. If a selection loses, the layer’s payout is refunded, together with the backer’s stake.
The commissions that betting exchanges charge are a percentage of the bets, usually varying between 1% and 5% of their value. Most of the operators charge commissions only on the winning bets. Some of them, however, charge commissions on both sides of the wager.
Much like betting at sportsbooks, betting at an exchange involves opening an account and funding it. At regular sportsbooks, bettors can back their selections, meaning that they bet the selected outcome will occur. In contrast, at betting exchanges, punters can either back or lay a selection. To lay a selection is equivalent to betting that a certain outcome will not happen.
Backing and Laying a Selection at a Betting Exchange
Punters have the option to either back or lay a certain selection at a betting exchange. Therefore, a standard win-draw-win market delivers the opportunity to choose between a total of 6 selections – to back or lay the Home team, to back or lay the draw, or to back or lay the Away team.
Generally, backing a selection is done the same way as placing a bet at a regular sportsbook. Punters make a selection and back it by wagering a certain amount of money on the agreed odds. The difference comes from the fact that the one taking the backer’s wager is not the bookmaker, but the layer of the same selection. What is more, when using an exchange, punters have the opportunity to choose the odds.
The possibility of laying a selection is what differentiates betting exchanges from bookmakers. If another user has proposed a wager that a punter is willing to accept, then the liability is deducted from the account.
|Liverpool vs Manchester United|
Backing a Selection at a Betting Exchange
Let us now have a look at some of the odds offered for a forthcoming fixture between Liverpool and Manchester United.
If we want to back a Liverpool win, we can do so at odds of 1.48. Once we place a wager of, let’s say €100, it will have to be matched by another punter who wants to lay Liverpool. Assuming the wager is matched, our €100 will be deducted from our account, and at odds of 1.48, our potential net profit stands at €48. That is the amount of money that the layer would have to pay out to us if Liverpool wins the match.
In this situation, the betting exchange holds a total of €148 from the backer and the layer of Liverpool. The commission is deducted usually from the winner. If Liverpool wins the match, our initial stake of €100 would be returned, as well as €48 from the layer. Once we pay a 5% commission on our net winnings of €48, or €2.40, our total return would be €145.60.
However, there is always the possibility of Liverpool losing the match. In such a situation, our back stake of Liverpool would lose. Our €100 stake will be transferred to the layer of Liverpool, along with their initial investment of €48. In this case, the exchange makes a profit by charging a commission on the winnings of the layer. Therefore, after paying a 5% commission on winnings of €100, the layer achieves a total return of €143.
Laying a Selection at a Betting Exchange
Let us now examine a situation where we assume the role of a layer of Manchester United. By choosing the role of a layer, we are acting as a bookmaker, since we accept a stake from a punter willing to back Manchester United. At lay odds of 8.00, let’s suppose we are willing to accept a €20 stake. Our total return would be €160, and the net profit stands at €140. The betting exchange holds a total of €160 (€20 from the backer, and, €140 from us). If Manchester United wins, the backer’s stake would be successful, receiving back his €20 along with €140 from us. After a 5% commission is applied on winnings of €140 (€7), the total return of the backer would amount to €153.
If Manchester United loses, it is the layer’s stake that would be winning. We would win €20 from the backer, along with our initial investment of €140. We would have to pay 5% on €20, receiving a net profit of €19.
Punters should be familiar with all the opportunities they have at a betting exchange. They can also choose to set their own odds, and as long as someone else accepts the offer, it becomes active.
Exchange Betting Strategies
When betting on football matches at a betting exchange, many punters prefer to rely on a certain strategy, placing them in a favorable position to win a bigger portion of their wagers. The selected strategy should conform to bettors’ bankroll and risk tolerance.
The first strategy that punters may look into does not deliver substantial profits, but locks in small winnings on a regular basis. It can be utilized freely and involves backing and then laying obvious favorites. Punters rely on the fact that odds are usually higher, say, one week ahead of the match, compared to the prices offered a day or two before the kick-off time.
A similar strategy for betting at exchanges entails laying then backing underdogs. This time, we rely on an expectation that the odds for underdogs typically go up closer to the start of matches. For both of these strategies, however, there is no guarantee that the odds will go down or up, and there is always a certain degree of risk involved, due to the many variables that should be factored in.
Yet another approach to betting at exchanges involves laying big favorites. It is riskier than the previous two, yet, it has the potential to bring decent returns in the long term. To get this strategy working, punters should take into consideration the current form of opponents, as well as various other factors. Big favorites win their matches for a reason. However, if bettors are closely monitoring players from both teams and their current form, they will be able to spot when weaknesses of favorites are in place.
Punters who prefer to lay big underdogs usually win most of their wagers. However, they risk paying out larger amounts of money in case the selected underdog unexpectedly wins the match. Large payouts in such cases, however, are compensated by the greater number of won bets.
Two more advanced strategies include laying multiple correct scores and laying multiple goal scorers. The idea is to eliminate the results and scorers that we think are highly unlikely. These types of wagering strategies are predominantly utilized by experienced punters.
A lot of punters betting at exchanges prefer a strategy that dictates laying than backing the Draw. What bettors should do is lay the draw pre-game, and once the match starts, they need to back the Draw at a favorable moment. Matches that deliver favorable preconditions for this strategy include teams with strong attacks and weak defenses. We need to look for high-scoring games that are unlikely to end in a draw. As the match progresses and an early goal is scored, the Draw odds go up, which presents us with a convenient opportunity to take advantage of the odds movement in our favor. However, there is always the risk of teams not scoring an early goal, whereby the Draw odds may go down.
Many bettors follow their own strategies for betting at exchanges which may prove to be winning in the long run, so once they explore all the available opportunities, they may develop a unique one.
Comparison Between Betting Exchanges and Sportsbooks
When all is said and done, choosing between betting exchanges and sportsbooks is a matter of punters’ personal preferences. Many sports betting enthusiasts prefer to use both types of platforms for their betting endeavors. In the table below, we provide a general comparison between betting exchanges and bookies based on some important parameters.
|Options bettors are provided with||Backing and laying bets; It is also possible to propose odds||Backing bets|
|How operators make profits||Charging commissions||Built-in profit margins on all odds|
|Odds||Odds are generally more favorable; Exchanges do not create odds; Bettors are matching wagers with one another||Odds are typically lower compared to those of betting exchanges; Sportsbooks set the odds and punters bet against the operators|
|Diversity of sports and betting markets||Sports and Betting markets are limited||An abundance of sports to bet on and betting markets to explore|
|Promotional offers||Limited promotional offers on account of low commissions||A great diversity of Welcome Bonuses, Free Bets, and various VIP Programs|
|Abundance of operators||A limited number of exchange betting operators||A great variety of sportsbook operators to choose from|
|Complexity||Less straightforward manner of betting||Uncomplicated manner of placing bets|
Besides the above-mentioned parameters, it is also worth noting that betting exchanges do not limit accounts of winning bettors, since they do not pay out their profits. It is the losing bet that covers the winner’s profit. What is more, betting exchanges charge a commission on winning bets in most cases, and therefore, closing or limiting an account is highly unlikely. On the other hand, there is no guarantee that punters’ bets will be matched, and the number of betting exchanges is considerably lower than that of sportsbooks.
It is also worth noting that betting exchanges will not limit larger stakes, while most bookmakers set upper limits. Betting exchanges play a pivotal role in various strategies of successful punters. One such strategy is matched betting, whereby a punter places a back bet at a bookmaker using a promotion, and simultaneously lays the selection at a betting exchange, thus locking in a sure profit, provided that stakes are correctly calculated.
As indicated in the table, the number and value of promotional offers included in betting exchanges are quite limited in comparison to those offered by sportsbooks. This holds true also for the much sought-after accumulator betting opportunities and related promotional offers.
With the emergence of betting exchanges, many claimed that they will eventually overshadow traditional sportsbooks. So far, these predictions seem to be wrong. While betting exchanges deliver a nice alternative to traditional sports betting, by offering competitive odds, low commissions, and the opportunity to lay bets, they do have their flaws.
The variety of betting markets available on betting exchanges is substantially less than the abundance of choices overflowing at sportsbooks. Furthermore, bettors like the simplicity of the manner in which sportsbooks operate, and are sometimes disconcerted by the idea of creating markets themselves.
When it comes to promotions, betting exchanges are underperforming in comparison to sportsbooks. Though some betting exchanges do offer bonuses, they are far less bountiful than those offered by sports betting operators. Ultimately, it is a matter of priorities and personal preferences, but many bettors like to use both manners of betting.