For most novice bettors – and indeed some more seasoned ones – the concept of betting exchanges can be daunting, hard to understand and occasionally fraught with danger.
Betfair is probably the most well-known of the betting exchange sites and it is no secret that Betfair trading requires a level of thought beyond simple betting. However for those who understand the intricacies and mechanics can often avail themselves of value and profits in excess of what might be expected wagering via more conventional means thanks to the potential for better odds on offer than those from high street bookmakers.
What is Betfair Exchange?
While Betfair does offer a more simple sportsbook to its customers the real value lies in dabbling on their exchange where bettors bet against other people rather than a bookmaker. As a result this can yield far better returns for shrewd investors willing to take on a greater element of risk rather than the ‘play safe’ option of the sportsbook.
Taking football as an example where a bettor might be stuck with 2/1 on their selected team’s predicted outcome through the sportsbook, playing the same selection through a Betfair exchange football market can often return a greater dividend as well as offer far greater flexibility.
Similar to the stock market where investors buy or sell stock, the Betfair exchange works in a similar fashion only with betting odds rather than commodities.
Betfair Exchange Explained
In a football match for example, an ‘investor’ can ‘buy’ (or back) a team’s predicted outcome at a certain price – say West Ham to win away against Chelsea at odds of 3.00. As the match progresses he can then ‘sell’ (or lay) the outcome of the game.
The terms ‘back’ (buy) and ‘lay’ (sell) are synonymous with betting exchanges and because the odds are fluid throughout the event the ‘investor’ can continue to ‘buy’ or ‘sell’ the match’s outcome in order to either maximise profit or limit losses throughout the match.
To back a team to win the odds on offer are shown in the blue column and to lay a team not to win the odds are shown in the pink column.
Example Exchange – Back/Lay
In football betting a home win is represented by ‘1’, an away win as ‘2’ and a draw shown by ‘X’. Here’s a very basic example… Imagine we back West Ham to draw with Chelsea at Stamford Bridge with a £10 bet at 3.00.
In the event our prediction is successful, the bet would return a profit of £20 if the match ended level. By ‘buying’ the draw we are betting on the match ending equal.
However, if either team were to win or the match then the loss would be capped at £10 – the money invested originally.
West Ham are playing well but the half-time score remains level. The odds now available on the draw result might alter and contract into 2.00 on account of them playing well.
We decide to lay the match outcome ending level with a stake of £15 which would return £15 plus the original stake; by ‘laying’ or ‘selling’ the draw we’re betting on the match NOT ending in a draw.
So, regardless of how the match actually turns out by backing and laying shrewdly we make a profit of £5 on the match outcome having covered all eventualities.
Back High / Lay Low
Similar to trading on the stock market we want to back higher prices and lay at a lower price or vice versa. This allows us to cover all eventualities in the match with a view to maximising our potential profit regardless of the result or minimise our liabilities (losses) if things aren’t going well.
Betting using similar tactics via a traditional bookmaker, for example using bet365’s live in-play betting might not yield the same potential profit as we would only be betting against the firm’s odds compilers rather than fellow Betfair Exchange users where we’d likely get better odds and so better returns.
The above is just a simple illustration of how betting exchange sites work and the opportunities go much deeper than detailed above. But you should now have a basic understanding of Betfair Exchange and the backing and laying of bets.