For many casual punters, the Betfair Exchange is a relatively unknown betting option. But everyone involved in the betting industry knows the benefits of the Betfair Exchange, which, among other things, allows you to get the highest possible odds for your bets.
Today just a few betting sites offer a betting exchange service, and you've probably seen how many different betting sites there are to choose from these days.
Betfair Exchange has the widest selection of markets available to punters
We think it's highly likely that Betfair will dominate this market into the near future, as it has a near monopoly on the betting exchange corner of the market. The British betting site has by far the widest selection on it exchange combined with an easy-to-use platform.
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About Betfair Exchange
The Betfair Exchange was created around the turn of the millennium by two Brits - Andrew Black and Edward Wray.
Black came up with the original idea after he fused together two interests of his: betting and the stock market. Ultimately he wanted to create a free marketplace for betting. And interestingly he is the grandson of the UK Conservative party politician Sir Cyril Black who, as a Baptist, was known for his trenchant opposition to the legalisation of UK betting shops.
Betfair is one of the world's leading betting companies and a lot of that has to do with the success of its betting exchange service
Andrew Black was clearly not affected by his grandfathers views, and in 2000 he ripped-up the rulebook and created the Betfair Exchange. The betting company he co-founded quickly became a success in the betting world, with players from all over the world.
Today, Betfair is one of the world's leading betting companies and a lot of that has to do with the success of its betting exchange service. Here, the sharpest players can get the best odds, and any curious punters looking for the best odds out there should definitely give it a try.
What is the Betfair Exchange and how does it work?
On the Betfair Exchange you bet against other players instead of betting against the bookmaker and their pre-determined odds, as in traditional forms of betting. The exchange market is left to regulate odds itself and Betfair only acts as an intermediary which holds on to money staked until the bets are settled. The key benefit with betting on a betting exchange is that typically the odds are higher and the value that a punter can derive is greater.
The majority of betting sites earn their money by setting odds corresponding to a lower probability than the reality. They balance the odds up and down to get the same amount of effort versus the odds on both sides of a match. That way, the betting company wins whatever the outcome, because the odds do not match the correct probability. At Betfair Exchange, however, you always get the market-leading odds because the gaming company does not cut back on the odds to make money. The players bet against each other and at loss it is a player who loses and not Betfair.
How do you place a bet on the Betfair Exchange?
As a new player, the Betfair Exchange can sometimes feel like hard work but in reality the learning curve is small and its very similar to traditional betting.
If you bet on the Betfair Exchange you have 3 options to choose from.
- Back (Bet for) - If you want to bet that a team wins, press the blue button called backing. It means exactly the same thing as placing a regular bet using a traditional betting site, the only thing that differs is that you get better odds.
- Lay (Bet against) - The opposite of backing a team to win is to lay or bet against a team. It’s as simple as clicking on the pink button. In this instance, you’re essentially acting as a betting company and taking bets from punters who are choosing to back the same team. If you lay or bet against a team and they lose then you’ll be the one who wins.
- Set your own odds - If you're not happy with the odds that are being offered then you have the option to set your own odds and allow other punters to bet against you. For example, you can set odds at 1/1 (2.00) that Liverpool won’t win against Manchester United on a stake of £100. Then all you have to do is sit back and wait on the Betfair Exchange for players to play against you on the conditions you’ve set - in this case Liverpool to lose against Manchester United at odds of 1/1 (2.00) for £100.
Betfair Exchange Fees
Because Betfair allows players to bet against one another and doesn't engineer the odds in their own favour (as traditional bookies do to 'balance their books'), Betfair doesn't earn any money on how the odds are set. To make money, Betfair instead charges a small commission fee for each net win on its betting exchange.
For all new Betfair customers, a 5% commission is applied as standard on winnings on the Betfair Exchange. However, this percentage can quickly decrease if you become an active player on the Exchange. So: the more you bet, the lower this fee will be. The exact distribution of what is needed to reduce the commission is easy to find on Betfair's website. Note that Betfair's commission is only valid for profit, so you do not have to pay a fee for your stakes (and any losses).
Betfair Exchange Cash Out
These days cash out is a well known function that many betting sites offer their customer base, and yet many don’t know that Betfair offers cash out itself, let alone that they were the ones who actually invented it! Cash out gives you the option to secure your winnings at any given time, or minimise your losses without having to wait until the match is finished. If you’ve placed a bet before the match and you feel the tide is turning it’s a good way to jump out before you feel a switch happen.
To use cash out all you have to do is click the yellow button and decide how much of your bet you want to opt out of
Betfair is still the market leader when it comes to cash out and on the Betfair Exchange you can easily see and track your live-bet in real time and decide if you want to opt out of the bet for a certain sum at any given time.
To use cash out all you have to do is click the yellow button and decide how much of your bet you want to opt out of.
An Example of Cash Out on the Betfair Exchange
Let’s say you’ve put a £100 bet on Man United winning at odds of 1/1 (2.00) before the match starts. Then they take a quick lead and go 2-0 up. You then have the option to Cash out your £100 bet at odds of 1 / 5 (1.20). It means that you’ll get £80 in winnings, even if after that Man United go on to lose the match. Therefore it was a smart move you cashed out when you did and didn’t risk losing all of your money.
Pros & Cons with the Betfair Exchange
Benefits of the Betfair Exchange
There are definite upsides to playing on the Betfair Exchange as opposed to opting for a ‘normal’ betting site, or a traditional form of betting. As we’ve said, with the Betfair Exchange you’re able to set your own odds because you’re playing against other punters and not allowing the betting site itself to dictate the odds you play for. In tandem, Betfair itself doesn’t have to worry about altering the odds to give themselves an advantage in order to earn money off of it.
You can wager for larger sums without having to worry about being limited by outside odds
You even have the option to set your own odds and have hitherto unprecedented control over how you play. In this respect you essentially get to act as a betting company yourself. If you consider yourself to be a savvy player it means that you have opportunities to win that other betting sites simply don’t give you. Last but not least, with the Betfair Exchange you can wager for larger sums without having to worry about being limited by outside odds.
Drawbacks of the Betfair Exchange
Despite all the advantages we’ve previously mentioned, there are still downsides to the Betfair Exchange that you should be aware of. One of these downsides is Betfair takes a 5% fee on any net winnings you make on the Betfair Exchange. However, the fee or commission they take only counts on any winnings you make and not on anything you simply stake or go on to lose.
Another thing that can be problematic with using the Betfair Exchange is that there can be less markets to play. In order to be able to use the Betfair Exchange you need another person who wants to bet against you. So for example, if you want to bet on a match in a lower division that is not as popular, it can be harder to find a person who wants to bet against you or wants to match your deposit. Having said that this is always a drawback to many betting sites as well.
What does it mean to ‘back’ something on the Betfair Exchange?
To back in a betting sense means that you’re betting on a team or a person you think is going to win. Let’s say you back Man United to win the Premier League next season, it means that you’re betting on them to win. Staking, wagering or betting on someone you don’t think is going to win would be the opposite of backing.
What does it mean to ‘lay’ something on the Betfair Exchange?
To lay or laying is the opposite of backing, meaning you’re placing a bet on a team or a person to lose. Let’s say for example you lay Liverpool to win the league next season. That means that you’re betting on Liverpool to not win the league. The same is true for single matches if you lay on Chelsea to win a match. It means you’ll win your bet if they lose or draw. If Chelsea were to win the match then you’d lose.
What does ‘Cash Out’ mean, or what does it mean to ‘cash out’ on the Betfair Exchange?
Cash out is a function that many betting sites offer their customers today. Betfair Exchange was actually the first to come out with this function. Still to this day Betfair’s cash out function separates itself from its competitors in that you can decide how much of your bet you’d like to cash out. On the Betfair Exchange you also have complete control over your bet, and can choose to secure your winnings or minimising your losses, using the cash out function to tailor it to your needs.
Is there a fee or commission involved in order to bet on the Betfair Exchange?
Because Betfair doesn’t earn anything on the odds on the Betfair Exchange, in order to make anything they take a 5% fee or commission for providing the intermediary service between punters who want to play against each other. Betfair only take a standard 5% fee on any winnings you make off the Betfair Exchange. They don’t take a fee on anything you stake or on any losses you incur. Betfair on occasion lower this fee if you’re an active punter on their exchange.
Can I use the Betfair Exchange on my mobile?
Betfair Exchange works exceptionally well on any of your mobile devices. It’s possible to experience the Betfair Exchange at its best from their website that they have taken time to completely adapt and make suited to your mobile. For an even better experience you can download the Betfair Exchange app that’s both available for iPhone and Android.