Betting exchanges have changed the landscape of online betting since their introduction, allowing punters to bet peer to peer and eliminating the need for a bookmaker. This basically means that you can not only back a result as you would with a bookie, but you also lay a result essentially becoming your own bookmaker.
They can also often offer better returns thanks to there being no middle man needing to make a profit, and this is why betting exchanges are popular with many bettors, but they can be a little daunting too if you aren’t familiar with them.
What’s more, with a handful of them to choose from with different strengths and weaknesses, it’s not always obvious where to turn. The concept of an exchange and their advantages and disadvantages are explained below, along with a quick run down of the three major players in this area.
Benefits of Betting Exchanges
Betfair, who are the largest betting exchange in the world, publicly claim that you can get up to 25% better odds through their betting exchange when compared to that of traditional bookmakers. This is because you aren’t betting against a betting exchange, they are merely providing the betting platform, you are betting against fellow punter, allowing you to pick up much better odds as a result.
This is due to the lack of ‘vig’ or ‘juice’ – terms meaning the money bookmakers charge you to use their service, their margin essentially. It’s not a number that is made public, but by offering slightly lower priced odds on a market than is realistic, a bookie can make a profit no matter the result. If you eliminate the bookmaker then the money they would usually take all goes to the winner of the bet instead.
Another benefit is that the diversity a betting exchange offers compared to traditional bookmakers is massive. Prices move all the time at an exchange, so you can wait until whichever market you want to bet on hits a price that is favourable to you, instead of hunting around for a good price as you would have to do at a bookmaker. On the flip side, if you think the price looks way too short you can then lay the outcome to essentially bet against it.
Exchanges are great for applying betting systems too. The ability to lay means you can use other bookmakers for certain markets and then lock in profits using the exchange as prices begin to change. Live betting is especially good on the exchanges and can be used to guarantee profits if used correctly.
Disadvantages of Betting Exchanges
Betting exchanges do have an added cost that you don’t come across at the bookies – they make their money by charging a commission on winnings. Most range from 2-5% which doesn’t sound a lot, but it’s a sum that soon adds up. Having said this, even after you have paid your commissions you will often find that you have received more than you would have done at a traditional bookmaker, but it’s a factor that many punters forget to take into account when comparing odds.
The primary argument for the traditional bookmaker model over that of the betting exchange is with the promotions they offer. Because the odds are better and the exchanges are working on a smaller margin than the bookies, it means they are generally less generous when it comes to free bets and betting specials.
Something else which we should point out, is that you cannot use the betting exchange platform to place an accumulator bet. However, most of the betting exchanges now bridge that gap by offering multiple bets in the traditional bookmaker format alongside their exchange.
The last disadvantage is that if you like to bet on more obscure markets then you might struggle to get your bet matched. Exchanges only work if there is someone at the other end willing to take your bet, and if there isn’t then your bet will not happen. A bookie will always take your bet, even if you are the only person betting on that market.
Betting Exchange Comparison
The list of betting exchanges is a little small when compared to the number of bookmakers out there. If you’re looking for some peer-to-peer betting action, here are your choices:
These guys are the daddy when it comes to the betting exchanges. They are the original and the best, offering what each of their competitor’s offers and often a lot more. They have free live streaming, masses of markets, fixed odds availability, and probably most importantly of all, a player base that allows you to match up on some of the more obscure betting markets. Exchanges are all about liquidity, and there are more people using Betfair than anywhere else. Betfair do have slightly higher commissions than their competition but these are on a sliding scale and you can decide which band you want to be in.
Betdaq is certainly more limited than Betfair, but it is catching up. For years they struggled with liquidity, trying to attract players with a lower 3% commission rate. This wasn’t really successful though, and until they were bought out by Ladbrokes not much changed. The exchange has now been added to Ladbrokes’ website, gifting them a much larger customer base, and they have also introduced 0% commission on most sports which is certainly winning punters over. They have also improved upon their features so Betdaq are a much more viable option than they used to be, especially for those who bet more outside of football, horse racing, greyhounds, and cricket, which still carry commission charges.
This is a good alternative with a flat rate 2% commission on all sports, and they have been known to drop that to 0% for promotional periods. Their platform is one of their major selling points because it is attractive and probably the easiest of all to use, and given that they have processed over £15 billion worth of bets plenty of people seem to agree. The company was founded by a team of software engineers and financial traders, and this comes through in their product. Although they don’t have as large a selection as sports as the others, they are the best for politics and current affairs, and if you bet on football, horse racing, greyhounds, or cricket, they will probably be the cheapest exchange to use.
What Happened to WBX?
WBX (World Bet Exchange) were another exchange in the market, providing a platform for peer to peer betting for almost a decade. Unfortunately, due to the increasing cost of regulatory compliance and levies in the UK as well as strong competition from Betfair in particular.
Malcolm Gray, the founder and CEO or WBX had wanted to company to be a real contender for the betting exchange crown, going head to head with Betfair by offering lower rates of commission, huge amounts of sponsorship, and building a reputation for fairness. However, being first to market gained Betfair masses of liquidity and even though WBX was able to buikld a customer base it is very difficult to take customers away from a platform they are used to.
Although officially in business since 2002, WBX didn’t officially launch until the end of 2006. They ceased trading around the same time in 2015, bidding customers a sad farewell and doing their best to see them all right as the company wound down.