Betting exchange – everybody can be the oddsmaker

The concept, on which the betting exchange is based, doesn`t really differ from the one, that runs the stock-exchange. In case of the betting exchange the role of a broker is being performed by the company, which runs the web site with the mutual bets. If in case of the stock-exchange shares are the stock, then in case of the betting exchange the bet is the stock. A general idea is well known and old as the hills, but when it comes to betting it has been started to be used relatively not long ago…

How it all began
The bookmaking revolution has begun seven years ago. It was in May year 2000, when the British web site the Flutter.com has opened the very first, based on “per-to-per” rule, the betting exchange. No more than a month later, so it was June 2000, when the other British betting company has followed the precursor`s bent, it was the Betfair. Although the Flutter has conquered 30% share of the market, they had to accept the fusion of both betting exchanges. The Betfair was becoming more and more popular every year. Nowadays it`s estimated, that about 90% of all “per-to-per” bets is being concluded through this particular betting exchange. Achieving such huge popularity was possible due to taking over the clients from the Sporting Options Company. In year 2004 this also coming from Great Britain company, which was also offering the betting exchange, was taken over by the Commissioner Board. Reason? Gigantic, overdrawing 5 million British pounds, financial indebtedness. And then the Betfair came into action, throwing proverbial lifebelt for every desperate Sporting Option`s member. They were offering for every member, for whom the Sporting Option owned not more than a 1000 pounds, a recompense in a form of a credit on the Betfair`s account. There was of course one condition: they had to register on the Betfair. The Sporting Option`s members, for whom the bankrupt company owned more than a 1000 pounds, was receiving from the Betfair either exactly 1000 pounds or 20 percent from the amount, which they have lost with the bankrupt (depending which amount was higher). Additionally until the end of the least year the former Sporting Option`s members could count on the discounts from the commission fees charged by the Betfair. Alike other types of exchanges, also the betting exchanges are developing better, the higher liquidity they can offer to their clients. In case of the betting exchange, such liquidity is nothing else, than the client`s belief, that exactly on this particular betting exchange, his bet will be matched with the counter-bet. What`s interesting, this is why among others the Betfair has broken with the British tradition of showing the fraction form of the odds (e.g. ¼) replacing it with the decimal form (e.g. 1.25), which was far more popular in the world. The huge success, which was achieved by the British Company, couldn`t be unnoticed and the revolutionary idea have quickly found new followers.

No penalty for the success
From the users` point of view, the betting exchange has three elementary advantages over the traditional betting. The advantage no. 1 is much better odds. Their height is being determined by the betters themselves. That`s why there is no place for the artificially dictated margins. If the better think, that the odd offered for the particular bet is too low, he can request for it to be increased, assuming that the other player will accept the bet with the new price. By betting on the betting exchange you`ve got a real effect on the market. Of course the company which is running the betting exchange is also making a profit. They are simply taking a commission from every winning. When it comes to Betfair the height of the commission is between 2-5 percent. The second advantage is that you can individually determine the odds and join the game from the oddsmaker`s position. This is a playing method where you need to make a bet that someone won`t win, it`s called “laying”. The third advantage can be defined as no penalty for the success. The traditional Bookmakers are used to impose a limit on the winnings. Even if it all seems to be a mumbo jumbo on the first glimpse, in fact playing on the betting exchange is not so difficult after all. All you have to do is to understand it`s basic rules…

Simple rules
First we are choosing the event. In this example we will choose the match between Villarreal and Barcelona. If you are playing as a backer, you need to look only on the left side of the table. By choosing Villarreal`s victory, draw or Barcelona`s victory, we are simply assuming that the match will finish with the result we have indicated. So this betting method doesn`t differ from the traditional betting. What is important, the fields marked in blue are showing the highest odds for this particular moment, which you can chose while back betting. Supposing we are betting on the Barcelona`s victory, then we can choose the 1.93 odd, where the maximum stake can be $59119.

BACK				LAY
Villarreal	3,95 $59,124	4,1 $66515	4,3 $66515	4,5 $67350	4,6 $67350	4,9 $59878
Barcelona	1,89 $59419	1,92 $51991	1,93 $59119	1,95 $71064	1,98 $63456	2,02 $56007
Remis	3,6 $66160	3,75 $66160	3,8 $66160	3,85 $66160	3,95 $50740	4,1 $50745

If we are interested in the higher odd for the Barcelona`s victory (or properly Villarreal`s victory, or draw) we can ask for it. Let`s assume that we want to bet $100 on Barcy`s victory with the 1.95 odd. We click on the blue field related to the Barcelona`s victory, we enter our request, we confirm it and … The table now looks like this:

BACK				LAY
Villarreal	3,95 $59,124	4,1 $66515	4,3 $66515	4,5 $67350	4,6 $67350	4,9 $59878
Barcelona	1,89 $59419	1,92 $51991	1,93 $59119	1,95 $71164	1,98 $63456	2,02 $71064
Remis	3,6 $66160	3,75 $66160	3,8 $66160	3,85 $66160	3,95 $50740	4,1 $50745

As you can see the pool for Barcy`s victory has increased by our $100. Now all we have to do is to wait, until someone who would like to play as a bookmaker (that is lay betting) will buy our odd. Until this moment our money (in this case $100) are held by the odd. If there will be nobody interested in buying our odd before the match will start, then $100 is going back to the pool of money that we have at our disposal. And what would happen, if we decided to play back and requested, let`s say the odd 1.96 for Barcy`s victory? Then the table would look like this:

BACK				LAY
Villarreal	3,95 $59,124	4,1 $66515	4,3 $66515	4,5 $67350	4,6 $67350	4,9 $59878
Barcelona	1,89 $59419	1,92 $51991	1,93 $59119	1,95 $71064	1,96 $100	1,98 $71064
Remis	3,6 $66160	3,75 $66160	3,8 $66160	3,85 $66160	3,95 $50740	4,1 $50745

The odd we have requested and the stake $100 have appeared on the lay side, although not on the red field, but just next to it. This is because on the red fields are shown only the most attractive odds for the laying player. From his point of view, the lower the odd is for the particular event the better. It`s being like that because the lay player`s responsibility, that is de facto the bookmaker`s, is being calculated as (odd-1) * stake. His victory will come about in the situation, when the stake for the lay bet is equal to the one, that the other player has bet on the back. So if player X (that is the backer) will bet $100 on the Barcelona`s victory with the odd 1.95 and the player Y (betting on lay) will accept this bet, then their situation, depending on the match`s result will look as follows:

1-st option: Barcelona is winning
Player`s X profit = (1,95x$100)-100=$95= Player`s Y loss

2-nd option: Barcelona`s victory or draw
Player`s Y profit = $100= Player`s X loss

If we were playing on lay we could of course request the odd, which would be more attractive from the bookmaker`s perspective. How to do it? We need to click on the red field, then we reduce the odd`s price, let`s say to 1.93 and we set the maximal stake`s amount (in our example it is $100), which the player betting on back can pick. Our table will now look like this:

BACK				LAY
Villarreal	3,95 $59,124	4,1 $66515	4,3 $66515	4,5 $67350	4,6 $67350	4,9 $59878
Barcelona	1,89 $59419	1,92 $51991	1,93 $59219	1,95 $71064	1,98 $63456	2,02 $56007
Remis	3,6 $66160	3,75 $66160	3,8 $66160	3,85 $66160	3,95 $50740	4,1 $50745

As you can see the lay side has changed. The pool, which we can play for, with the odd 1.93, has increased by our $100. This amount is being held until the time, that some back player will decide to accept our bet. If you would like to get the odd 1.94 on lay betting, then the table will change as follows:

BACK				LAY
Villarreal	3,95 $59,124	4,1 $66515	4,3 $66515	4,5 $67350	4,6 $67350	4,9 $59878
Barcelona	1,92 $51991	1,93 $59119	1,94 $100	1,95 $71064	1,98 $63456	2,02 $56007
Remis	3,6 $66160	3,75 $66160	3,8 $66160	3,85 $66160	3,95 $50740	4,1 $50745

Even, if playing on the Betting Exchange might look a bit complicated at the beginning, in fact it`s not so difficult. You can learn how to play, not risking losing your money, by taking part in the Betfair`s training programme.



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