Matched betting requires two things. A bookmaker account and a betting exchange account. If you've bet online before you will be used to placing bets on bookmaker websites such as William Hill, Bet365 or Paddy Power but you may never have used a betting exchange before. In this article we'll take a look at what betting exchanges are, how to use betting exchanges and how you can use them to profit from matched betting.
Best Betting Exchanges
What are betting exchanges?
Betting exchanges work slightly different to online bookmakers. When betting at a bookmaker such as William Hill or Ladbrokes, you place a bet and if it wins the bookmaker pays you your winnings. With betting exchanges, there isn't an actual bookmaker and users bet against each other. You have the option of betting on events with odds set by other users or you have the option of setting your own odds for events and allowing others to bet on them. The second option effectively allows you to become the bookmaker. Confused yet? Don’t be, it will all become much clearer.
Back bets and Lay bets
One of the main differences between a bookmaker and a betting exchange is the option to place a Lay bet on a betting exchange. A lay bet is betting on something not to happen. For example, Man Utd are playing Chelsea and you don't think Chelsea will win. You could place a lay bet on Chelsea which would mean your bet would win if the match results in a draw or Man Utd winning. Basically anything except a Chelsea win. You also have the option to place a Back bet which is betting on something to happen. Using the previous example, if you place a back bet on Chelsea, your bet would win if Chelsea win but lose if it's a draw or Man Utd win. You can place back and lay bets on all events on a betting exchange such as a horse to win or lose a football match to end 0-0 or not or a player to score a hat trick or not.
Back bet = Betting something will happen
Lay bet = Betting something won't happen
Betting exchanges in matched betting
Using betting exchanges are a fundamental part of matched betting. Matched betting involves covering all outcomes of an event to guarantee a profit no matter what the result is. When matched betting you are required to place a back bet with a bookmaker and a lay bet with a betting exchange and so you will be using betting exchanges just as much as online bookmakers.
How betting exchanges make money
Bookmakers make their money by people losing bets and having a slight edge on the odds. However, with betting exchanges you are placing bets against other users and not the exchange itself and so it is often asked how betting exchanges make money. They make money by taking a percentage commission of your net winnings. For example, Betfair and BetDaq charge 5% commission on net winnings and Smarkets charge 2%.
Back Man Utd to beat Chelsea @ 2/1
Man Utd win and your return is £30 (£20 profit)
You pay 5% commission on £20 = £1
Total return = £29
The commission paid to betting exchanges needs to be taken into consideration when matched betting so that you can calculate your lay stakes correctly and keep an accurate track of your profits. However, if you are matched betting using a matched betting service such as MatchedBets or OddsMonkey, then the exchange commission is preconfigured into their calculators which tell you how much to back and lay on each bet, meaning you don't have to worry about it.
Which betting exchange is the best?
There are a handful of betting exchanges we recommend and for different reasons. Betfair is the original and most popular betting exchange but they do charge a higher commission than an exchange such as Smarkets who charge only 2%. One thing to take into consideration when using an exchange are the available funds on the market you are betting on. The available funds is the amount you can back or lay on each bet and are determined by how much other users have bet on the event prior to you. Betfair, being the most popular betting exchange, usually has the largest available funds on markets, which allows you to place your bets without worrying they won't be matched by other users. Again, if you are using a matched betting service, they will usually advise you which betting exchange is best for your bet based on market availability and commission percentage.
Matched and Unmatched bets
In order for your bet to finalised on a betting exchange, it must be matched by another user. If you are placing a lay bet then there must be a user who is willing to back the same bet for your bet to be matched. If your bet is unmatched it will be refunded to your account. When matched betting it is important to make sure there are enough available funds on the exchange to match your bet prior to placing it. If there are not enough available funds then you should find another bet.
How to use betting exchanges
Betting exchanges generally all work the same in that you have the option to place a back bet or a lay bet on each event. However, each betting exchange has it’s own layout and it is important to know your way around each betting exchange prior to placing your bets. You can read our guides for Betfair exchange and Smarkets to gain a better understanding of how to use each site individually.