IF you haven't heard of betting exchanges, you soon will. Of all the developments in bookmaking over the past 20 years, this is probably the most innovative.
IF you haven't heard of betting exchanges, you soon will. Of all the developments in bookmaking over the past 20 years, this is probably the most innovative. It is also the one thing most likely to change the nature of betting over the next 10 years, especially as use of the Internet for betting becomes standard around the world.
The concept is extremely simple. Instead of people betting with a bookmaker, they bet against other bettors. The exchange merely introduces bettors to each other and holds the money to ensure whoever wins the bet gets paid. The exchange charges the winner a small commission but because you are not using a bookmaker, the odds on offer are much more competitive, as you're not paying for the bookmaker's profit margin.
It also means that you can act as the bookmaker. If you go to a betting exchange, you can offer to take someone's bet.
This is how it works:
Let's say you want to bet on a Manchester United vs Arsenal game at Old Trafford. The betting line across Asia is Manchester United/Arsenal 0 : ½ 1.96 1.94. But on the betting exchange you might find that the offers are Arsenal/Manchester United 0 : ½ 1.97 1.98. You can either decide to accept the better odds offered by other bettors, or you say that you would like to post a bet on the site that you would like to have.
So, you might decide you want to bet on Arsenal at odds of 2.02. You then submit your bet of US$100, saying you want odds of 2.02. This is put up on the site and then other bettors can come along and offer to take that bet on. The bet will also be converted into an offer to someone else to back Manchester United at 1.98 (ie the opposite - also known as the reciprocal - of 2.02 is 1.98). This means that the line will have moved to Manchester United/Arsenal 0 : ½ 1.98 1.98.
When you go to an exchange they list how much is on offer at a certain price. So, it might say that you can bet US$100 on Manchester United at 1.98 and US$5,000 at 1.97. This is known as the 'depth' of the market. On the bigger exchanges you can find competitive offers of up to US$25,000 on most matches and as much as US$1,000,000 on some occasions.
Some other betting exchanges have not taken off. Flutter was the most high-profile of the exchanges so far but it merged with Betfair. Play2Match, which is owned by Coral Eurobet, closed because of a lack of liquidity. There will undoubtedly be new exchanges opening over the next couple of years and we will report on them as they emerge.
Click here to open an account with Betfair, the world`s leading betting exchange.