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A betting exchange is where you bet against other people, not a bookmaker. You can place a normal bet or you can act as a bookmaker and offer odds on something not to happen.
Exchanges display odds in decimal format as it is easier to read.
A back bet is the same as a bet you would place at a bookmaker. The difference is that you choose what odds you like.
For Example, You want to place a bet on Spurs to beat West Ham.
The current odds showing are 2.12 to back and 2.18 to lay.
A lay bet or laying is where you bet on something not to happen, basically you are acting as the bookmaker. You can choose your own odds and you want to lay as low as possible.
For example, you dont think West Ham will win so you want to lay them.
The current odds are 2.9 to back and 3 to lay. You can lay straight away at 3 or queue for 2.9.
Say you lay £50 at the available price of 3 (2/1).
This means someone else is betting on West Ham at 3 (2/1) and if West Ham win you have to pay them.
So, if West Ham win (and your bet loses) you have to pay out £100.
But if West Ham lose or Draw (your bet wins) you get to keep their £50 stake.
So effectively you are risking 100 to win 50, in this example very much like betting £100 on “Spurs or Draw” at odds of 1.5 (1/2).
Why use an exchange?
Better Odds – Exchanges tend to have better odds than bookmakers. But they will take up to 5% comission on winning bets, so you need to take this into consideration. For lower odds they would be close to bookmakers odds but for higher odds exchanges will almost always have superior odds.
Trading – Trading is where you can bet and lay on the same market and manage to make a profit even before the event has started. You can also trade in-play.
You bet £10 on a horse at odds 11(10/1). If it wins you will receive £110.
The odds have changed to 6(5/1). You can now lay at 6(5/1). By entering different amounts at the exchange you can decide how much to lay, but in this instance you could walk away before the race has even started with £18 back from a £10 bet. So a £8 profit.
Big bets- As long as there is the liquidity, you place as big as a bet as you like. You might struggle to get a couple of grand on a horse at a bookie, but that is not a problem at an exchange, as there are loads of people laying bets using their money.