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Sports - Betting Exchanges
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Intro: What are online betting exchanges and how they work
Written on Sunday 28th of October 2012

Betting exchangesIntroduction to Online Betting Exchanges

One of the most dramatic changes in recent years to gambling on sport was the introduction of online betting exchanges (peer-to-peer betting). This new type of internet betting not only caused a media frenzy, but it radically changed the way punters could place bets for good. Its huge popularity upset many of the major bookmakers, who had been shaken by how rapidly this style of betting had taken off.

Betting Exchanges v's traditional Sports Betting
Rather than the usual way to place a bet, where the bookmaker sets odds and a punter will back a bet of their choice. Online betting exchanges marry customers up against each other. One will act as the punter (backer) and the other will act as the bookmaker (layer). Effectively eliminating the traditional bookmaker from the betting equation. The vehicle for connecting punters together in this unorthodox style of betting is the internet.

Due to the very nature of online betting exchanges the removal of the so called 'middle man' gives an estimated 20% better odds compared to conventional types of betting. The truly revolutionary change to come in with peer-to-peer betting was the facility to lay bets just as a bookmaker would. Every day people are now able to offer odds as well as being able to back odds. This new found freedom for punters has created a monstrous industry that has become a worldwide phenomenon in a very short space of time.

Backing and Laying Bets

Backing a bet is done in the same way you would do with a traditional bookmaker. Making a selection and backing it to win based on the odds offered by the bookmaker, giving you just one opportunity of success. Laying a bet is the opposite of backing it, you are betting that something will NOT happen.

Take the example of two football teams playing against each other Team A v's Team B. You may be confident that Team A will not beat Team B so you offer all-comers a price of 3.0 (2/1) with a maximum liability, say of £100. Then you wait for another punter to take you up on your offer. A supporter of Team A takes you up on your offer by placing £50 on their team. If your prediction that Team B will win and Team A wins instead, you will lose £100. However if Team B wins or the match is drawn then you pocket the £50 stake placed by the punter who supported Team A (minus a small commission from the Betting Exchange you are making the bet with). Therefore of the three possible outcomes of the match, by laying a team you were able to bet on two of them.

Pitfalls of Betting Exchanges
Due to the speed at which online betting exchanges have risen to prominence, cries of foul play have been heard mainly from the world of traditional bookmakers. After a few alleged betting scams involving jockeys flying off horses mid race, the government was asked to intervene to avoid horse racing's reputation being ruined. Luckily the industry is now at a level where it can self-police its users and many online betting exchanges aren't afraid to make examples of any crooks trying to exploit the system. However with customers being able to lay bets without requiring a licence, the industry will have to be closely monitored if it is to avoid too much bad publicity or worse.

New players venturing into the world of betting exchanges, may be wise to seek guidance before diving in head first. There are experienced gamblers who troll online betting exchanges preying on newbies who make poor decisions due to lack of knowledge.