A sportsbook is a location where punters play against the bookmaker. Contrary to that, a betting exchange is a platform, where bettors place wagers against each other. The process allows for greater flexibility as users can offer their own markets, besides the usual ones, and their own odds. The only requirement is that another player accepts the challenge. However, there is an even more intriguing concept to explore.
In addition to the matching of wagers, the usual practice is for the punters to believe that something will happen and «back» it up through their bets. However, exchanges add a new concept. The «lay» bets where users actually say that something will not happen. Let’s discuss the works behind the notions.
The betting exchange concept
In a traditional bookmaker, a sportsbook, the house sets the odds and the limits. Consequently, the punters can either accept the offers, or look for something else. The alternative comes with the exchanges. Here, people can set their own odds, limits and what they want to wager on. If one punter says that he wants to place bet on an outcome of a match, they also say what amount they want to bet at what odds. For this wager to be accepted, another user must accept the offer. When this happens then the bet is «matched» and waits for the final result to determine who wins and who loses.
The bookmaker in this case just provides a location where the two players can meet and do business. Their profit comes through charging a commission. And here comes the first separator between a good and a not so good betting establishment. Most of them charge their profit on the winnings, meaning that the winner will pay the commission. However, there is a number that charges the fee per transaction, meaning that both sides will contribute to the profit of the hub.
«Backs» and «Lays»
Betfair introduced the concept and it has become a staple for every exchange. Basically, when a punter accepts a bet, they say that what the initial proposal suggests, will actually not happen. If someone says that Team A will win over Team B and they stake x amount at y odds, the one who accepts the offer, believes that this will not happen. Essentially the first punter «backs» up what he believes. Hence, the bet is called a «back» bet.
Based on this train of thought, and to add greater options and more versatility, the «lay» bet appeared in the market. It actually says that an outcome of a match will not happen. Of course, this extends to every possible market. When a bettor offers that Team A will not win over Team B, the wager also covers the draw. Hence, the more options and versatility.
Other features of betting exchanges
Some characteristics are common to both Sportsbooks and Exchanges. One such feature is the «Cash Out». It’s the chance, that both betting establishments give a player, and says that they can save at least a part of their stake, if an event does not go their way. Actually, the concept also extends to those matches that at some point met the parameters of the bet. However, as there is always the possibility of a surprise, Cash Outs allow players to collect their full earnings at that point. Even if the match is not over.
That being said, there are some features that are unique to exchanges. The partial matching of wagers is such a characteristic. It means that when a player makes an offer of x amount at y odds, another player may only accept a part of the amount. Depending on the rules set by each establishment, such a bet can be valid either when it is fully matched (meaning another player accepting the remaining part of the bet), or only for the part that has been matched.
Conclusion
To put it simply: exchanges give freedom of choice. This is the bottom line. A Sportsbook says «take it or leave it». An exchange says «make an offer and someone could accept it». Sportsbooks build their profit inside the odds that they offer. And it may be a lot more than what the exchanges charge for a transaction between two players. In conclusion, it’s all being free to choose. However, since this freedom is based on the good quality of the platform, you may need the services of the best agent for betting exchanges, to help you select the one that suites you the most.
