Betting exchanges are becoming increasingly popular for bettors looking to bet with better odds than the ones on offer at traditional bookmakers. Many believe that betting with an exchange will always provide better value than a bookmaker. The question is; is this actually the case? Read on to find out.
What is a betting exchange?
Betting exchanges have gained prominence over the last decade, especially as bettors have become more educated and found their options limited in terms of being able to place a bet. Although what the odds mean and how you place a bet is the same as a normal sportsbook, there are several differences when it comes to using an exchange.
With a traditional sportsbook, it is a company who operates as the bookmaker. The bookmaker determines the odds on offer and available limits and they make money if you lose or pay out if you win. In contrast, an exchange service pits bettors against one another and provides the option to both “lay” (post odds) and “back” (bet on) the outcome of a particular event.
Betting exchanges make money by charging a commission on top of any profit you make as a customer (this typically ranges from 2-5%). A bookmaker, however, ensures they make a profit by offering odds that don’t accurately reflect the true probability of an event – the adjustment they make to the odds is called a margin.
The pros and cons of using an exchange
An exchange is merely a platform for users to place (or take) bets and while it has various benefits, it also has some often overlooked downsides. One of the biggest positives of betting through an exchange is that, unlike a sportsbook, it doesn’t rely on betting margins to make profit. This means exchange bettors will benefit from better odds compared to those betting with the average sportsbook.
Another benefit that an exchange service offers bettors – and for some the most useful – is the ability to trade the market to guarantee profit. The act of “laying” a bet at a shorter price than when you have “backed” it (or vice versa) is often referred to as “greening up” – this is because all potential outcomes of an event appear in green to show how much profit will be made.
Although the odds might offer more value at an exchange compared to the average bookmaker, the amount you are able to bet is determined by the liquidity of a market. If you want your bet to return more than anyone is willing to risk paying out, you will have to settle for less or wait for someone else to offer the same bet (at the same odds) to increase your stake and potential returns.
In addition to having to bet with lower limits than you might want, betting through an exchange means you are reliant on other people posting markets. If you want to bet on a particular event using an exchange, you need someone who thinks they have sufficient knowledge to actually offer that market.
The odds you bet with are also only one component of betting (albeit the most important). The notion of value extends beyond odds, the limits you bet with and the number of available markets to bet on are just two more examples of things that serious bettors will want to consider when deciding who offers the best value.