Betting Exchange
The first “betting Exchange” was created in the year 1999-2000. The idea was very simple, however fairly innovative. The simplicity of the idea lays to the fact that the player not only can receive bets but also offer bets to other players at the odds he or she considers being fair.
The innovation formed by the betting exchange concept, lies in the fact that someone does not have to exclusively bet through betting companies. There are new alternatives set and new roles formed, such as the role of the intermediary and the ability to have two players bet at the same game, however on opposite outcomes-against each other.
We will try to clarify the concept with an example. In a football game, someone can bet an amount favoring the victory of the home team. If there is interest from another player to bet against the victory of the home team obviously there is an opportunity for these two players to bet against each other. As long as they manage to agree at the “price” of this transaction between them. The betting FOR/AGAINST (the English wording is Back & Lay) is done in the following way. Someone who wants to bet that the outcome of the game will be 1 (the home company will win) has to bet FOR the point 1, accepting the best return that is provided-offered by another player-member of the betting exchange.
This is not different from the already existing method of betting through a bookmaker. The player who is AGAINST has the role of the bookmaker because he/she offers returns on bets by accepting the challenge from other players. These other players bet in favor of the stated outcome.
There are companies which undertake the role of the intermediary, by providing the mechanism which matches the two sides in a bet. These companies, which are involved in Betting Exchanges, provide the mechanism and the software for the operation and the functionality for those transactions. For their services they charge a percentage through a small service fee to the side which wins the bet. Indicatively the first, the largest as well as the best known company which has organized an environment of a Betting Exchange is a company called “Betfair”. Betfair offers a wide variety of products.
Example
Assume that we have the game REAL MADRID-BARCELONA
| 1 | X | 2 | |
| FOR | 2,70 (400) | 3,20 (900) | 2,80 (200) |
| AGAINST | 2,85 (1200) | 3,45(500) | 3,02(300) |
There is an offer at point 2 of
In the case this someone wants to bet a higher amount (300 Euros) for BARCELONA then for the first 200 Euros there is an immediate match (the one discussed above) however for the remaining 100 Euros he/she will have to wait until a new player takes a similar position (against the victory of BARCELONA) such as to find a cover or find someone to match the remaining 100 Euros.
The player can bet a smaller amount than 200 Euros and find an immediate match.
One advantage of the Betting Exchange is that the players can bet any amount, there are no limitations to the amounts the bettor-participants can bet. This is not the standard practice of the traditional bookmakers; since there are limitations to the amounts someone can bet (threshold limits).
The Betting Exchanges do not have any restrictions to the amounts someone can bet as long as
1) The amounts are available.
2) There is another player matching the bet.
The Betting Exchange is quite similar to the Stock Exchange of financial products, since the betting for or against a point is equivalent to buying or selling a return.
Key Points
1) There is no bookie profit margin, since the player is not betting against any bookmaker.
2) The betting has two options either FOR or AGAINST.
3) The FOR option is equivalent to the already known method of betting.
4) The winner always pays a small winning commission (small percentage on the total amount of the profit).
5) The amounts and the returns attached to it are all set by the laws of supply and demand. This is the ONE AND ONLY LAW which dictates the behavior of the bettors (similar to stock exchange based financial products).
Arbitrage / Hedging
These terms are widely used in the financial products. In the world of returns they insinuate reduction of risk by betting on more than one bookmaker and taking advantage of the various differences in returns. These techniques require extremely large amount of capital to be available and committed to betting.
For example, if the return in a point of a game is 2,30 in a Betting Exchange and 2,40 in a traditional Bookmaker, then someone could be accepting bets in a Betting Exchange and simultaneously bet in the bookmaker such as to benefit from the small margin difference of 0,10. The bookmakers are definitely using such techniques in order to hedge their risks (they bet in Betting Exchanges for bets, the amounts they have received from their clients in lower returns).
Oddsandstats.com is your partner in maximizing your financial profits. The Betting Exchange example together with the Guaranteed Bets unveils the importance of the comparison of bets. This is the reason behind the fact that in the comparison tables for the returns, we also provide returns for Betting Exchanges.
This allows the bettor to develop a comprehensive understanding with regards to each game and the associated returns offered to the same outcome.
