Betting exchange is a form of sports betting where the bet of some players can be exchanged and redeemed by other players. The technique, inspired by stock betting, is prohibited in some countries.
Betting exchange requires an organization to provide to players (or brokers) all the necessary tools. The organization in question, usually providing an Internet platform, takes a commission on winnings from gamblers. It include for example Betfair, the best known betting exchange site.
On this website, bettors can bet on the outcome of a race or event (“back”) or bet against the outcome of the considered race or event (“lay”). The “back” stands as a classic bet, except that bet come from other bettors.
When a bettor is betting against (“lay”), it takes the place of the bookmaker and offers to other players to bet on the outcome he played. Thus, the odds offered by “back” come from “lay” bets that bettors have made.
This form of betting offers the advantage of benefiting from more favorable ratings compared to bookmakers. Unlike the latter who receive a margin on all paris they offer, the betting exchange system fee 5% usually of the total earnings of the winner, 2 times less than the margin of betting sites that is approximately 10%. The major drawback of the betting exchange is the concept of supply and demand. Indeed, it is only possible to bet when other players are willing to exchange a bet with you.