A Matched Bet at a Betting Exchange is confusing for EVERYBODY the first time they get their head round it. It was confusing for me, it was confusing for BasherDuncan, and if I was a betting man I would wager it is confusing for you, as a beginner.
Don’t despair. Once the penny drops it becomes routine very quickly.
The video below introduces a betting exchange, what it does and all the different options we have of seeing our bets. The important concepts are Decimal Odds, Liquidity, Market Depth, Backing & Laying and Commission.
What is an exchange?
A betting exchange is a platform where users can place bets against each other, instead of the traditional format of placing a bet with a bookmaker. I can go on there and place a bet with you. I can offer any odds I like (up to 999/1), any amount I like (over £2) on any market I like. You can see the bets I and others are offering, and can decide for yourself if you want to take that bet. If you agree to take my bet then the exchange acts as escrow; an escrow is a middle man who holds on to money from two parties until it is time for one to be paid. Betfair will take the money from you and me and wait for the event to settle before paying out to the winner. The exchange will take some commission from the winner; this is how they make their money. The commission they take will vary between 2 and 5%.
There are a number of different exchanges in the UK: Betfair is by far the largest, with the most amount of markets, users and liquidity (money available). Other exchanges include Betdaq, Ladbrokes Exchange, Smarkets and Matchbook.
Useful tip – change your settings
We can change the settings on Betfair to make our lives easier. Open the settings drop down list by clicking here:
In the Settings button, we see the following options:
Make sure the following are ticked:
(1) Lay odds, so that we can lay our bets
(2) Market depth, so that we can see how much money is available at different odds, and
(3) Profit & loss (net of commission) so that we can understand what our position will be on an event.