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What are Betting Exchanges?

The developing world of gambling has opened up new ways of punting to make markets more enticing for bettors. The traditional form of betting puts you against the bookmaker, with the bettor having little to no control over the odds or markets available.

However, the formation of betting exchanges like the Betfair Exchange puts punters in direct competition with one another, adding an extra layer of excitement to the experience. The system allows one punter to bet on the selection to fail – also known as a ‘lay’ bet - rather than predict the correct outcome of the event. One thing to note about the Betfair Exchange format is that it always shows odds as decimals by default.

The betting exchange offers greater flexibility with odds that can be influenced by the trend of the market, which bookmakers may or may not wish to respond to. In a normal betting market, a small number of people thinking odds should be shorter or longer is unlikely to be enough to sway the odds, but on a betting exchange it only takes two partiest to be in agreement to secure those differing odds. This is often why the odds will be better on a betting exchange compared to a traditional bookmaker.

The development of the exchange has proved to be a popular move by Betfair, giving them an edge in the market by offering a different stance to other bookmakers. The option of lay betting has added an extra dimension to live betting, for those wishing to back against a selection, with the added ability to opt against your selected side if conditions in the contest were to change. 

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Example of Betting Exchanges in Sporting Moments

2017/18 Manchester City 

Manchester City were the most dominant team in the 2017/18 Premier League season according to most metrics, storming to the title with a record amount of points as Pep Guardiola’s men blew away the competition with relative ease. Manchester United were on their pace in the early stages of the campaign but fell away after suffering defeats at the hands of Huddersfield and Chelsea. The crux moment in the season came when United hosted City at Old Trafford. City were able to emerge victorious thanks to goals from David Silva and Nicolas Otamendi, handing them an 11-point lead at the top of the table.

Now, this would be where their odds for the crown would have been venturing towards the 1.01 (1/100) range. There will have been more than a few bets on City to close out the crown due to their overwhelming advantage. Therefore there would have been a solid market from the field, perhaps even in the range of 26.0 (25/1) for United or one of the other chasing pack to reel Guardiola’s men in and snatch the title away from them. The value itself would be intriguing, while there is more than enough evidence to suggest that teams are capable of collapsing.

Newcastle United were seemingly poised to win the Premier League for the first time in the 1995/96 season. The Magpies held a 12-point lead at the top of the table over Manchester United in January but then went on a terrible run of form in the closing stages of the season. They lost five out of eight matches between February and March, allowing Sir Alex Ferguson’s men to eradicate Newcastle’s advantage and win the crown. As it turned out in 2017/18, Man City managed to hold firm despite defeats to Liverpool and United later in the term. However, it does highlight the value of the Betfair Exchange and had it been around in 1996, a punter would have seen a healthy profit. You can use Infogol’s expected goals model to help find value in over or under performing teams. Where’s the value this weekend? Head to our free Football Tips Centre to find out who our experts fancy!

Golden State Warriors

These American sports teams are perfect examples of why the Betfair Exchange is useful in sports betting, although neither side will be delighted to be part of the analysis. The Warriors enjoyed a dominant run in the NBA in the 2015/16 season, breaking records on their way to an incredible 73-9 term. They rolled into the post-season aiming to secure back-to-back NBA championships, having previously defeated the Cleveland Cavaliers in the Finals in the last term. The two sides faced off against one another again in the Finals in 2016 and the Warriors were able to establish a 3-1 lead in the series, using the brilliance of Steph Curry and Klay Thompson to put them within striking distance of their second successive triumph. The odds would have been well in the favour of the Warriors, needing only one more win, which included two home matches in the remaining three games of the series. As a result, someone using the exchange to back the Cavaliers would have been offered great value on their odds even with LeBron James and Kyrie Irving. The rest is history as the Cavs won the final three matches of the series to win the NBA Championship in a thrilling upset.

Atlanta Falcons

The Falcons are an example of the use of the Betfair Exchange in the live betting environment.  In Super Bowl LI, Atlanta stormed into a 28-3 lead against the New England Patriots. It was one of the most overwhelming leads in the history of the Super Bowl, holding a 25-point advantage with just 18 minutes of the contest left. Dan Quinn’s men had a 99.1% chance of victory, which would have been reflected in their odds to see out a comfortable win. Betting against Atlanta at that point would have seen great value, which would have paid dividends as the Patriots came storming back to produce one of the greatest comebacks in NFL history.

Exchange Usage

As proven by the examples above, there’s always an element of risk when betting. However, the Betfair Exchange can be more rewarding than a normal bookmaker as it takes more skill and know-how to get the maximum return. It takes knowledge to pull off success and should be considered by all serious punters.