A betting exchange differs from a bookmaker in that it brings individuals together that want to place bets (known as backing) and those that want to take bets (known as laying). With a betting exchange the market determines the price rather than any one individual or organisation, meaning it’s often a more accurate reflection of the market and it’s sentiment.

Betfair Exchange Homepage

This video explains how a betting exchange works in relation to matched betting.

The Major Betting Exchanges

There major betting exchanges are shown in the table below with the estimated value of bets that they match per year

  • Betfair - £56 Billion (source)
  • Betdaq - £3.9 Billion (source)
  • Smarkets - £198 Million (source)
  • Ladbrokes Exchange - Included in Betdaq’s figures
  • Matchbook - Information not available

How do Betting Exchanges Work?

The betting betting exchanges match people together to create contracts on the event of an outcome. Their value lies in creating the marketplace where backers and layers can be identified and when a price is agreed, the contract is made.

Example

  • John wants to back England to win. He has £10 to stake and wants odds of 10.0. This is his back bet
  • Bill wants to lay England to win and is willing to offer odds of 10.0
  • The Exchange matches both people together and agrees the contract. Funds are then held in escrow until the event finishes
  • England lose and Bill takes £10 from John

England Back & Lay Odds

How Do Betting Exchanges Make Money?

Where traditional bookmakers make money by creating an overround on any particular market that they offer odds for, betting exchanges charge a commission on any winning bets (both back and Lay bets). This ranges from between 2% - 5% on the winning bet. The table below shows the standard commission charges for the major UK betting exchanges

  • Betfair -5%   - Winning Bets * Accrue points that reduce commission rate the more that you bet
  • Smarkets - 2%  - Winning Bets
  • Betdaq - 5%   - Winning Bets
  • Ladbrokes Exchange 5% - Winning Bets
  • Matchbook 1.15% - All bets placed

Liquidity on Betting Exchanges

Liquidity is the amount available to either back or lay on the exchange at the time you want to place your bet. It’s represented as the small number below the odds.

Betfair Liquidity

If you want to ensure that you bet gets matched straight away, you need to ensure that your stake doesn’t exceed the value underneath the odds on any betting exchange.

Betting Exchanges for Matched Betting

Betting exchanges have opened up the possibility for individuals to profit from both bookmaker sign up bonuses and reload bonuses. Because you can now lay bets, quickly and easily via the exchanges, you can create huge arb opportunities and make risk free profit. Many people are doing this on a daily basis to make up to £1,000 per month. Read our Matched betting guide for more information.

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