How Gambling Exchanges like betfair work

A Betting exchange in the simplest terms is an entity that allows people place bets against others via a platform of organized trading; rather than the use of the conventional bookmakers. Betting exchanges has created a new trend in terms of volume and transforming the way punters back or lay in any given event. It is succinct to mention that betting exchanges have also given rise to Arbitrageurs. Arbitrageurs are simply individuals who place bets on any of the possible outcomes in any given event in order to cut a decent profit. There are various players in the Betting Exchange Industry and it is pertinent to note that the biggest traders in the Betting Exchange market today are Betfair and Betdaq. A cursory look would be given in a detailed form on how these organizations operate.

A Brief Overview of Betfair and Betdaq

Betfair which currently has the largest market in the Betting Industry has its operational base in the United Kingdom. It was started in 2000 by Edward Wray and Andrew Black. Betfair created new traditions in Betting exchange with the introduction of decimal odds in place of the fractional odds model. Betfair originally carved a niche by referring their trade as open-market betting. However, the British press renamed it Betting Exchange which is the commonly accepted name today.

On the other hand, Betdaq began trading in September, 2001. It was founded by Irish Businessman, Dermot Desmond and the company’s operational base is in Ireland. Betdaq is indisputably the second largest betting exchange company. Betdaq has offered a variety of options to punters and have had a fair share of success in making the Betting Exchange industry more virile and engaging.

How Betting Exchanges like Betfair and Betdaq work

In order to simplify the operational workings of Betting exchanges; their terms of trade would be briefly highlighted below. Punters no longer have to deal with bookmakers. It is now based on a Customer to Customer placement of bets. The Betting Exchange Company simply provides a platform for a punter to place a bet and be matched with another punter with a different proposition of the outcome of an event. The Betting Exchange simply takes a percentage of winnings and this gives ample room for punters to play big. Market forces drive the proceedings and various dynamics are introduced to allow people to move their odds in whatever direction they so desire. Most Betting Exchanges now offer online opportunities for people all over the world to place bets. Telephone services are also operational. In-play betting and simultaneous placement of bets either to lay or to back is also allowed. Betting Exchanges with high liquidity allow for punters to place high stakes. This is possible because the system encourages winnings due to the re-alignment of the operational betting procedures in the industry. If a high stake is placed, the betting exchange can match it with a similar high stake of opposing views. However, if a matching high stake is not accessed; multiple small stakes can be used to match against the high stake. In the event where there is no matching bet, the stake is not placed.

In order to clarify some of the points raised above, I would like to give an example of how betting exchanges work. Let’s say Mr. A. Places a bet that a particular team would win in a Rugby Final match; he is known as Backing because he is expecting a positive outcome from a team in the Rugby Finals. Mr. B. Can place a bet that that team would not win and this is called Laying because he is expecting a negative outcome for the team. The wager which is the actual betting sum is now placed. Conventionally, this scenario would hold in the traditional bookmaker setting until the final outcome which is a win or a loss for the Rugby Team in question.

Interestingly, there are other dynamics in the betting exchange that allows Mr. A. To carry out In-play betting while the Rugby Final Match is going on, he can either lower his fixed odds for the team he is vouching for to win or increase it. Furthermore, he can bet on the odds of the given Rugby team to win and at the same time bet on the odds of the team losing; this would cut him a profit no matter the outcome of the Rugby Final Match.
The Betting Exchange Company simply gives Mr. A. and Mr. B. a platform to trade and whatever scenario plays out at the end of the game, the Betting Exchange simply takes a commission on the winning margin. The benefits of Betting Exchanges over conventional Bookmakers Punters have a better offer than what is obtainable from Bookmakers. The payouts are higher and even when the commission charged by the Betting exchange is put into cognizance; it still gives the Punter a fair bargain. Due to the ability to Back and lay, it allows Punters to balance their risks and with more versatility and open up their odds for cutting a profit. The In-play betting advantage is second to none and a wide array of events such as Soccer, Car Racing, etc., is open to the Punters to choose from and place their stakes. The Liquidity is high and Betting Exchanges such as Betfair; allow punters to place high stakes.

The minimum bets allowable in Betting Exchanges

It is interesting to note that very low bets are accepted and high stakes are also easily accommodated. Variations of the minimum amounts to be placed abound in different Betting Exchanges.

The Mode of playing in a Betting Exchange

A large amount of Punters places their bets online however, provision is also made for bets to be placed via Telephone. It is pertinent to mention that most Telephone placements are only allowed in some Betting Exchanges if the individual has an account with them.

The Financial Security System

Betting Exchanges have solid security systems to ensure the privacy of their customers is protected. Most Betting Exchanges encrypt the details of the Debit and Credit Card of their customers to avoid hacking. The secure Servers offer ease of use of the online platform and ensure that the financial security of the customer is not compromised.

Incentives for New Customers

Most Betting Exchanges offer initial free bets for new customers and gives them the opportunity to either back or lay. The low entry amount for bets makes them able to accommodate a wide range of Punters.


The Betting Exchange Industry has grown in volume and in professionalism. The last decade has raised the bar in the operations of this industry.

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