BetFair’s explainer on betting exchanges

Chris F. Masse December 23rd, 2006

… (a.k.a. real-money prediction exchanges).

How do betting exchanges work?

A betting exchange is a bookie which uses technology to make sure you get a better price. It does that by reducing its risk, which means it doesn’t have to build in extra margin as a safety cushion. The effect is that punters bet on the price they want, and not the price they’re told they can have.

Imagine two friends having a bet while watching a football match; an impartial observer holding the money while the game is played. A betting exchange works in the same way: our members bet against each other, and Betfair hold the stakes until the bet is settled.

What are the benefits of a betting exchange account?

Unlike traditional bookmakers, who employ people to compile the odds that they offer, Betfair don’t set odds, or bet in any event. We simply set up a market for our members to bet against each other. This means three main benefits for members:

- On average 20% better odds
If you want to back a selection, the odds are likely to be better than a traditional bookmaker, because individuals are betting on their opinion rather than building a margin into their price as a bookmaker does.

- Back or Lay
On a betting exchange you can back your selection to win in the “traditional” manner. Alternatively you can take the other side of the market and back a selection not to win (or “lay”), by offering odds to other members. The ability to back or lay a selection provides the added benefit of allowing you to “trade” a position and lay your bet back if it looks the likely winner, to guarantee yourself a profit.

- Bet in-play
Because there so many members around the world asking for and accepting odds while an event is “in-play”, you can back or lay right up to the final whistle of a football match or up to the last second of a horse race.

How do betting exchanges make money?

Betfair take a small commission from people who win on a market. If you lose on a market you pay no commission. For a greater explanation of our commission structure, how it works and how much you pay, see here

Why Betfair?

Betfair is by some way the world’s largest betting exchange and, with over 100,000 members betting each month from all over the world, there are members waiting to match your bet 24 hours a day 7 days a week.

Who are Betfair?

Betfair was launched in June 2000 by co-founders Andrew Black and Edward Wray. Generally regarded as one of Britain’s most successful and innovative companies, Betfair now employ over 600 people and have won a host of awards since our launch, including the prestigious Queen’s Award for Enterprise. You can find out more about the company, its performance and results at our corporate site:

www.betfaircorporate.com