What Is a Betting Exchange? An Overview

Sports betting has undergone a transformative shift in recent years, aided by changing regulations and advances in tech.

Sportsbooks, both on and offline, have long dominated the space, offering fixed odds on various events. However, the rise of online platforms and mobile applications has introduced a more profitable and interactive experience.

One notable addition is the recent emergence of betting exchanges, which offer an alternative model to traditional sportsbooks.

Contents

1. What Is a Betting Exchange?
2. Key Features and Benefits of Betting Exchanges
3. How Do Betting Exchanges Work?
4. Matched Betting With a Betting Exchange: A Guaranteed Win
5. Which Is the Best Betting Exchange to Use?
6. Betting Exchanges: The Future of Matched Betting Success

1. What Is a Betting Exchange?

A betting exchange is a platform that pairs up individual bettors, enabling peer-to-peer (P2P) betting.

Whereas an online sportsbook operates a model where they set fixed odds and bettors place wagers against them, a betting exchange facilitates direct bets between users. There is no middleman.

Instead, one user acts as the backer and the other acts as the layer. The backer places a bet for a specific outcome and the layer accepts the bet, essentially saying that the opposite outcome will happen.

Betting exchanges have gained popularity due to their potential for higher returns, increased market transparency, and the ability to trade bets in real-time.

We’ll look at how betting exchanges work in a bit more detail in a moment, but first, we’ll quickly cover some of their key features and benefits.

2. Key Features and Benefits of Betting Exchanges

The specifics of betting exchanges can differ from provider to provider, however, they all generally tend to share a few common features. Here are some of the most important to be aware of:

• Betting for and/or against: Users can place either back and hedge bets. Hedge betting is typically what the sportsbook does when they take your bet on a sports betting platform. However, betting exchanges mean users can take on that role.
  
  
• User-Generated Odds: Unlike traditional sportsbooks, betting exchanges operate on a P2P basis. The absence of fixed odds set by a central sportsbook opens a more flexible betting environment where users negotiate odds in real-time.
  
  
• Better odds mean better value: Sportsbooks don’t often provide "true" odds, adding their profit margin (aka hold) on top of the actual odds. This isn’t the case on betting exchanges. This transparency means bettors can access more accurate and competitive odds.
  
  
• Flexibility in wagering: Where a sportsbook might decline a bet if they don't align with predetermined odds or stake sizes, with a betting exchange your bet will get placed as long as there's a hedge bettor ready to accept the risk at your desired odds on a betting exchange.
  
  
• Commission on winning bets only: Betting exchanges only charge commission on successful, or winning, bets. Commission charges differ from exchange to exchange.
  
  

3. How Do Betting Exchanges Work?

On a traditional online sportsbook, all bets you place will fall under the category of back bets. This is where you bet in favor of an outcome. However, betting exchanges offer an alternative…

Betting exchanges introduce the concept of hedge bets, allowing you to bet against an outcome. This dynamic enables the exchange to match players with opposing views by pairing back and hedge bets on the same event.

Back and hedge betting

So one bettor can back Team A to win and another will lay the same bet by betting on Team A to lose. The betting exchange then matches these bets so that both sides are covered.

If the back bet wins, the person who placed the back bet receives the stake from the opposing player who placed a lay bet. If the back bet loses, the player who laid the bet receives the stake.

Now that we know what a betting exchange is and how it works, it’s time to look at what you can do with it to earn serious cash…

4. Matched Betting With a Betting Exchange: A Guaranteed Win

Matched betting is a clever win win betting strategy which allows bettors to maximize their profits and minimize their risks by covering both potential outcomes of a sporting event. Coupled with sportsbooks’ promotional offers, this strategy can see individuals making $1,000s every month.

Betting exchanges are a fundamental part of the matched betting process across Europe, but what about here in the US?

With a limited number of exchanges available in the US up to now, unless you live in a state where betting exchanges are available, the matched betting process here typically involves using two sportsbooks to place the opposing bets. Either way, the process still follows the same four overarching steps.

Step-by-step

1. Open an Account: Look for an online sportsbook which is offering a free bet bonus to new customers.
   
   
2. Place a Qualifying Bet: Also known as a ‘back bet’, this is a bet placed via a sportsbook on a sports team to win a game. Doing this will unlock the free bet.
   
   
3. Place an Opposing Bet: Also known as a ‘hedge bet’ or ‘lay bet’, this is a bet wagered on the opposing team to win the game via a betting exchange (or a secondary sportsbook if you don’t have access to a betting exchange).
   
   By doing this, you have covered all outcomes of the event and unlocked your free bet, without risking your own money.
   
   
4. Repeat the Process: Once the sports event has finished, and you have received your free bet from the sportsbook, it’s time to repeat the process using your free bet. Repeat steps 2 and 3 on a different sports event to guarantee a risk-free profit.

5. Which Is the Best Betting Exchange to Use?

The betting exchange landscape is still relatively small in America when looked at in comparison to the number of online sportsbooks. However, things are changing all the time, with new betting exchanges regularly entering the space.

Here are the betting exchanges currently available in the US:

• Prophet Exchange: New Jersey and Indiana
• Sporttrade Exchange: New Jersey and Colorado

And here are the betting exchanges set to launch in the very near future:

• Betfair Exchange
• BetDEX Exchange

6. Betting Exchanges: The Future of Matched Betting Success

Betting exchanges, an alternative to online sportsbooks, are transforming the way we guarantee profit from matched betting.

While betting exchanges are integral to matched betting in Europe, limited availability in the US has meant a different approach. However, that looks set to change as more betting exchanges enter the space.

That's where ProfitDuel comes in!

ProfitDuel’s software, including the Dutch Matcher makes it easy for you to do matched betting using an online sportsbook and a betting exchange. For example, you can use the tool to find and sort the best matched betting odds and then place a back bet via an online sportsbook and a hedge bet via a betting exchange.

Let us know if you've got any questions or start your 14-day free trial to give matched betting with a betting exchange a try.