Betting exchanges have revolutionised the way that the betting industry operates. When the first pioneers – at Betfair and a few smaller companies many of whom they eventually swallowed up – introduced the idea of sports trading for individual customers, the major bookmakers quickly cottoned on to the notion that they were about to face some serious competition.

What Are Betting Exchanges?

The idea behind betting exchanges was to offer a sports betting product which operated like the stock market. Punters can back and lay (buy and sell) sporting outcomes, the majority of which are offered in-play. The ability to bet against a selection means it is possible to trade on sporting events, locking in profit before the result has been decided or minimising losses if things don’t go the way you had hoped.

Whereas bookmakers set the prices and make money from punters losing bets, the exchanges allow individuals to set the odds and make their money from charging commission or a transaction fee, either on all bets or more commonly on just winning bets. Given that the prices are set by the market, the value that can be found on the exchanges is often better than the same bet with the bookies.

Bookies make their money by factoring in an over-round. A round book is when the percentage chance of each selection winning totals 100%, anything over 100% is the percentage of profit the bookies would make if they took equal money on all selections. Before the exchanges came around it was not uncommon to see books running at 120% or even more. On the exchanges, the books run at much closer to 100%, therefore the odds on each selection should, in theory, more accurately reflect their chances of winning.

Do Exchanges Offer Greater Betting Value?

In the early days the exchanges advertised by saying that they offered much greater value than the bookies which forced the hand of their competition. 120% books are now very rare indeed as the bookies have fallen more into line with the exchanges and expanded their offering to other products like online casinos.

This means that for the average punter there is now not such a huge difference between the exchanges and the bookies especially when you consider that the average commission paid on winning bets is around 5% (if the odds with an exchange are 5% better than a bookie but they take 5% in commission, the odds are effectively the same). The commission rates do vary between the different exchanges however so it is important to take note of them before betting, whilst regular bettors can garner discounts on their commission rate.

Although the exchanges do generally still offer slightly better value than the bookies, they cannot offer such a large amount of special offers. As the bookies set their prices they can also provide enhanced odds offers which will almost always be at a bigger price than the exchanges. Such enhanced odds are offered daily by the biggest and best betting sites.

Which Are Better For Betting Offers, Sportsbooks or Exchanges?

As well as special offers, the bookies compare favourably against the exchanges on the biggest events where it pays for them to be as competitive as possible. However, on outright markets such as golf tournaments, shopping around on the exchanges can provide some huge prices when compared to the bookies.

The same can be said for outsiders in horse racing, or indeed any sport or event where the odds are relatively long. For example, whilst the match odds on a given football match will usually be quite similar at an exchange and an online/mobile bookmaker, the correct score markets, especially on some of the higher scores, might be considerably better at the exchange, even factoring in the commission. This, though, is tempered by the issue of liquidity, with some of these smaller markets unlikely to have sufficient liquidity to generate such great odds, or certainly not at any sort of sizeable stake.

Despite that caveat, is remains fair to say that you are likely to get better odds on the betting exchanges when compared to the bookies on certain markets and events. However, the difference between the two is nowhere near as big as it once was and the huge amount of enhanced odds that the bookies now offer gives them a great competitive advantage and gives you the chance for some huge winners, whilst a range of money back refunds also give you an insurance that you will rarely, if ever get, at an exchange.