Jim, from Belfast, asks: Hi guys, I have been betting with bookmakers for years, but I hear that I can get better odds with exchange betting. Is this true?
A: Hi Jim, thanks for your question. The issues created by the formation of betting exchanges are some the main discussion points in the sports betting industry at present, so your query is very timely.
For those unfamiliar with what exchange betting is, a betting exchange is essentially a platform through which bets on sporting events can be matched between individuals.
Traditionally, betting was done through bookmakers. But those bookmakers are businesses that have costs and need to make profit. To do this they would add a margin to their odds, so that they would make money whatever the outcome of an event.
However, the advent of exchange betting has essentially removed the need for traditional bookmakers.
In the same way that eBay, for example, allows individuals to buy and sell items to each other without the need for a traditional shop (and all the costs that come with it – staff, business rates, rent, etc), betting exchanges like Betfair allow individuals to bet against each other without the need to cover the overheads of a bookmaker.
So the betting odds that are on offer on the betting exchanges are usually closer to the true representation of what the chances of an event occurring should be – as they do not have the bookmakers’ margins built in – and that means, Jim, that yes, in theory you will usually get better odds in exchange betting.
However, there are some other points to consider.
Exchanges make their money from charging a percentage on all your winnings. It is worth noting that this percentage can be quite steep if you are winning a lot. If that is the case – and if you follow our sport betting tips it almost certainly will be – then the margins bookmakers work in to their odds might actually be less than the percentage you will lose from your winnings to the exchanges, so the better odds might conversely pay out less.
Equally, there is the question of liquidity. Some markets on the exchanges are thriving, but there are plenty which are not. If there is no one willing to lay you a bet on the outcome of the event you wish to bet on, then you will not make any more on it. At least with the traditional bookies you will usually get your bet matched, even if the odds are a little slimmer.
Our advice generally is not to limit yourself to one method or the other. Open accounts with the traditional bookies and exchange betting firms, and then you can have the best of both worlds.
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