If you are thinking about trying your hand at exchange betting on horse racing then don’t be put off if you don’t know the difference between a regular bookmaker and a betting exchange.

What is the foreign exchange market? What drives exchange rates? Zoe Fiddes, Currency Analyst comments. Betting exchanges have opened up a world of drastically improved odds for punters, predominantly because bookies have had to slash their odds to remain competitive. Commission that betting exchange is taking from the players is far less than the one with traditional bookmaker, hence some profit cuts have been made to punters favour.

It is true, at a betting exchange you might very well find the same betting opportunities as you would with a bookmaker, but there are a few distinct differences.

For instance…

What Is A Betting Exchange

When you place a bet with a bookmaker, you are in competition with that company. If you win, they payout, but if they win, they keep your money. That is the contract that both you and the bookie entered into after all.

Betting exchanges, on the other hand, allow punters to partake in matched betting and rely on other customers to both back and lay the bets against each other. Exchanges make their money by charging a small commission fee on every bet placed on their platform. This fee is a percentage of the estimated winnings.

When bettors are going up against each other, the betting exchange will match them either if they are backing, which is to bet to win as with a bookie, or laying, which is to lose or bet against an outcome occurring.

On the other hand, bookmakers allow customers to place a bet on any outcome of their chosen event. Because they are not risking their own money, you will often find better odds on an exchange platform than with bookmakers who will also factor in their overround (margin).

Why Does Liquidity Matter

Liquidity is the pool of maximum money that a bettor can put down on a given betting exchange market. No bet can exceed this amount. A bet can only be matched as long as there is enough to cover its opposing outcome.

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The current liquidity of a market is usually shown below the odds and is constantly changing. As the start of an event draws closer, so too will the liquidity rise as last minute money pours in, making it easier to place matched bets.

Liquidity is important because whatever you wish to lay or back needs as bigger money pool as possible so that everything can be matched even at specific odds.

Naturally then, big markets like the Cheltenham Festival or Royal Ascot will have more people betting on it than a lesser known event such as a class 5 handicap on a Monday afternoon for which you might struggle for the required liquidity hence why it matters.

Why Use An Exchange To Bet On Racing?

What Is Exchange Betting

It is well know that, on average, you can get better odds with an exchange compared to fixed odds bookmakers. With people betting with each other there are no margins, as a fixed odds book would have. Rather odds are set by the person who lays the bet and they will have different motivations to fixed-odds sportsbooks.

What Is Exchange Wagering

Conventional bookies do not really care what the odds are as long as they can balance their books to make sure they make a profit. The odds from punters who lay bets in exchanges are specific to that one bet and so the odds are more reflective of the true probabilities. Other factors play a role too, in exchanges people are more likely to set better odds because they are using their own instincts rather than just stats and algorithms.

Exchange Wagering New Jersey

While exchanges offer better value in general you are most likely to get the best of this in bigger races, where there are more people offering odds and competing with each other for people to back them. This means better value and higher liquidity.

Exchanges will not always be better, especially on more minor races where there is less interest. Even in these cases exchanges still often provide better prices.

Exchange Wagering

Of course the other major advantage is you can lay bets for other people to back. Say you are sure the favourite will not win but you don’t have a strong feeling what horse will win you could lay the favourite on the exchange and if it loses you win.