Matched Betting Exchanges

Betting Exchange Quick Find Betdaq Betfair Exchange Matchbook Smarkets

Online gambling has exploded since the advent of the internet and betting exchanges have been at the forefront of the online betting revolution.

The ability to bet on an exchange has opened up a new world of opportunities for the traditional sports bettor, none more so than matched betting, the easy way to make tax-free profits from betting.

What makes betting exchanges different to online sportsbooks is the ability for the man in the street to get involved in lay betting, the long-time preserve of traditional bookmakers. Betting exchanges are trading platforms that facilitate person to person betting. Members bet with each other and can open back or lay positions of their choosing, or simply accept bets offered by other members.

Betting exchanges take a commission, up to 5%, on transactions and this low cost entry has attracted better informed and more financially focussed bettors with the result that exchanges can offer near 100% books on many sporting events. What this means to the punter is fair odds and online bookmakers have been forced to offer better odds in their attempts to compete with betting exchanges.

There are other advantages too, in-play betting provides the option to lock in profits mid-play and fluctuating odds have attracted traders who use exchanges in the same way as binary financial markets.

Betting exchanges are the driving force behind matched betting. The ability to lay selections provides the opportunity to make a profit from betting promotions. Bettors can obtain free bets and bonuses for little or no cost by laying against a qualifying bet placed with the bookmaker. The subsequent bonus can be converted into cash profit using the same method of laying against the free bet selection.

betting exchange market

The layout of bet exchanges may look confusing for people whose only experience of betting is with conventional bookmakers and sportsbooks. The columns of odds are offers from backers and layers waiting for their bets to be matched. The liquidity (total amount of money available to back or lay) is shown below the respective odds.

The best odds available to back and to lay are highlighted and members can chose to bet at those odds or post their own offer with the stake they are willing to back or lay which will be added to the queue.

Placing a bet on the exchange

Placing a back bet on an exchange is not difficult. Click on the best available odds in the Back section and simply enter the required stake. A dialogue will pop up asking to confirm the bet. Once confirmed, the bet will be matched as long as there is sufficient liquidity (the amount of money available to be matched at the selected odds). If not, the bet will be partially matched and the remaining stake will be offered in the lay section until someone comes along and accepts the bet.

Members can request any odds they choose by clicking the best available odds and changing the value to the odds required.

Lay betting explained

When lay betting it’s important to understand the liability which is how much it will cost if your lay bet loses. Unlike a traditional back bet which risks losing the stake placed with a bookmaker or exchange, lay betting can risk much more as the stake entered is the amount the layer is prepared to accept at the offered odds.

For example, placing an offer of £10 at odds of 6.0 (5/1) carries a liability of £50. This is how much the backer could win for matching the lay bet while the layer stands to win the £10 back stake.

To place a lay bet, select the lowest odds in the Lay section, enter the stake and the dialogue will show the liability. Once confirmed, the bet will be matched. As with back bets, any unmatched part of the lay bet will be queued until someone accepts the bet.

betfair lay bet

lay bet

To offer lower odds, edit the odds when the dialogue box opens. The liability of the lay bet must be ring fenced from the member’s account balance to ensure the backer receives payment if the selection wins. Once a lay bet is matched, the liability is deducted from the balance until the market settles.

If the lay bet is successful, the ring fenced funds are returned along with the backers stake, less commission from the winnings. If the selection wins, the lay liability minus commission is transferred to the backer’s account.

UK Betting Exchanges

Betfair became the pre-eminent UK betting exchange after merging with Flutter.com in 2000. Liquidity is the vital factor for a successful trading platform and the merger has ensured Betfair remains a favourite for matched betting welcome bonuses and free bet offers like acca insurance. The company strengthened its place in the online gambling market when merging with Paddy Power in 2016.

Betdaq was founded in 2000 and is the second largest betting exchange in the UK. It was acquired by Ladbrokes in 2013 and continues to trade with Betdaq branding. Meanwhile, Ladbrokes provide access to the exchange from its website and although it is branded as Ladbrokes Exchange, it is in fact one and the same platform as Betdaq.

Matchbook was formed in 2004 without making much impact until 2011 when acquired by a group of investors. The betting exchange provides a different commission structure with a very low rate of 1.7% (or 0.85% for Posted Offers). However, commission is charged on all bets, not just winning bets as with other exchanges. It has built a good reputation for high liquidity football markets and more recently added horse racing to its range of sports markets.

Smarkets is the latest UK betting exchange, launched in 2008. It has received plaudits for its ease of use and while providing a limited range of sports betting markets, it is gaining in popularity due to good liquidity and low commission rate of 2%.

Using Betfair Exchange

Once you’ve logged in to Betfair, you’ll find the event by typing the name (or part of the name) in the search bar at the top of the page or by navigating the menu on the left side of the page. Most people find the search bar easiest to use because of the high number of markets to navigate in the side menu.

Once you’ve found the event, click on the market to view it in full. In this example below, we’ve chosen the QPR v Brentford Match Odds market.

In the above image you see the full market view for QPR v Brentford Match Odds. The selections are listed on the left, in this example the three possible outcomes are QPR win, Brentford Win and the Draw.

The coloured columns show the best current odds to back and to lay for each selection. The Blue column shows the ‘back’ odds which is what you select when you want to place a bet on the selection to win. The pink column shows the ‘lay’ odds which is what you select when you want to bet the selection to lose.

Underneath the decimal odds you’ll see the amount of money available to back or lay – this is known as liquidity.

In the example, there is £113 available to back QPR to win at odds of 2.78. This means you can bet anything up to £113 on QPR to win at those odds and your bet will be accepted. The term for having a back or lay bet accepted is ‘matched’.

In the pink column, there is £610 available to lay QPR to lose at odds of 2.8. This means you can lay up to £610 on QPR to lose at those odds and the bet will be matched.

Placing a Back Bet

To place a back bet, simply click on the blue box alongside your selection and a dialogue box will appear to the right of the market, as in the example below.

The selection and odds are automatically populated and you are required to enter a stake amount. I’ve typed in £10 stake and the exchange shows me my liability and potential profit.

The liability is how much I stand to lose from the bet which is my £10 stake and the profit of £17.80 is what I can win from the bet.

Click the Place bets button to make your bet. Confirm the bet for the exchange to match your bet and deduct the stake from your exchange balance. Any returns due will be credited once the market has settled at the end of the game.

If at any time you want to stake more than the available liquidity, you have two options.

Enter the desired stake and available funds will be matched immediately, the excess will appear in the pink column waiting for someone to place a lay bet at the odds.

Or, you can click on the next best odds, 2.76 in the above example, and your bet will be matched at the best available odds. This means you’ll be matched at 2.78 for the available liquidity and the remainder at 2.76.

Placing a Lay Bet

To place a lay bet, simply click on the pink box alongside your selection and the dialogue box will appear to the right of the market.

The selection and odds are automatically populated and you are required to enter a stake amount. I’ve typed in £10 stake which I’m willing to accept from the backer. The exchange shows me my liability and potential profit.

The liability is how much I stand to lose from the bet which is £18 and the profit I can make is the £10 backer’s stake.

Click the Place bets button to make your bet. Confirm the bet for the exchange to match your bet and deduct the liability from your exchange balance.

Make sure your all of your lay stake has been matched. Details are shown under the heading ‘Matched bets’ after confirmation of placing the lay bet.

Any returns due will be credited once the market has settled at the end of the game.

If at any time you want to stake more than the available liquidity, you have two options.

Enter the desired stake and available funds will be matched immediately, the excess will appear in the blue column waiting for someone to place a back bet at the odds.

Or, you can click on the next best odds, 2.82 in the above example, and your bet will be matched at the best available odds which means you’ll be matched at 2.8 for the available liquidity and the remainder at 2.82.

It’s important to remember, you must have enough money in your exchange account to cover the liability. If not, you will need to make a deposit.

There are a number of betting exchanges to choose from and they make their money by taking a small percentage from the winning end or in the case of Matchbook, a smaller percentage of both the losing stake and the winnings.

Smarkets has a low 2% commission rate and the exchange offers plenty of markets for matched betting. It’s popular with matched bettors so we’ll explain this exchange too.

Using Smarkets

Once you’ve logged in to Smarkets, you’ll find the event by typing the name (or part of the name) in the search bar at the top of the page or by navigating the menu on the left side of the page. Menu navigation is quick as Smarkets has fewer markets than Betfair.

Once you’ve found the event, click on the market to view it in full. In this example we’ve chosen the the Euro 2016 group game between England and Russia.

The above image shows the Winner market for England v Russia.

The selections on the market are listed to the left. There are three possible outcomes, England win, a Draw and Russia win.

The coloured columns show the best current odds to back and to lay for each of the selections. The Green column shows the odds ‘for’ the selection which is what you select if you want to back the selection to win. The Blue column shows the ‘against’ odds which is what you select if you want to lay the selection to lose.

Underneath the odds, you see the amount of money available to back or lay, the liquidity.

In the example of England, there is £484 available ‘for’ England at odds of 1.94 which means you can bet anything up to £484 on England to win at those odds and the bet will be matched.

In the blue column, there is £5304 available ‘against’ England at odds of 1.95 which means you can lay up to £5304 on England to lose and the bet will be matched.

Placing a Back Bet

The above example shows how to place a back bet for England to win. Click the green box with 1.94 odds to accept the price. A dialogue box appears with the default stake of £10 which can be adjusted to your preferred stake by typing a new amount and shows the return you will receive if England win.

Select ‘Place Bet’ and confirm the bet. Your bet will be matched and the stake deducted from your exchange balance. Any returns due will be credited once the market has settled at the end of the game.

If at any time you wish to stake more than the available liquidity, you have two options.

Enter the desired stake and available fund will be matched immediately, in the above example £444. The excess will appear in the lay (blue) side as 1.94 waiting to be matched.

Or, once the £444 has been matched at 1.94 you can cancel the unmatched amount and back the remainder of the stake at the lower odds of 1.93 which will appear in the green column as the best available back odds.

Placing a Lay Bet

The above example shows how to place a lay bet against England to win.

Click the blue box with 1.95 odds to accept the price. A dialogue box appears with the default stake of £10 which can be adjusted to your preferred lay stake by typing a new amount. It shows the return for the back bet and the liability for the lay bet. The liability is the amount you will lose if England win, in the above example it is £9.50, while you will win the back stake if England lose or draw.

Select ‘Place Bet’ and confirm the bet. Your lay bet will be matched and the liability deducted from your exchange balance.

Make sure your all of your lay stake has been matched. Details are shown under the heading ‘YOUR BETS’ after confirmation of placing the lay bet.

Any returns due will be credited once the market has settled at the end of the game.

It’s important to remember you must have enough in your exchange balance to cover the liability. If not, you will need to make a deposit.