For those new to the world of betting, particularly matched betting, there often exists some confusion regarding the differences between traditional bookmakers like Paddy Power, Coral, or Bet365 and betting exchanges such as Betfair, Smarkets, or Matchbook.
So in this article, we’ll explain exactly what the differences are between bookies and betting exchanges…
Key Differences Between Bookmakers and Betting Exchanges…
On the surface, betting exchanges may seem to offer the same betting opportunities as traditional bookmakers, but several key distinctions set them apart.
Revenue Model
Firstly, the revenue model differs significantly between bookmakers and betting exchanges. Traditional bookmakers allow customers to place bets on various outcomes of an event and then lay these bets themselves, risking their own money if the customer’s bet wins. In contrast, betting exchanges do not lay any bets. Instead, they act as a marketplace where customers can both back and lay bets against each other. The betting exchange generates revenue by charging a commission fee on each bet placed.
This fee is typically a small percentage (2-5%) of the estimated winnings, ensuring the exchange earns money regardless of the outcome.
Flexibility in Betting Options
Secondly, betting exchanges are generally less flexible when it comes to accumulator bets. Customers on exchanges cannot always create accumulators with their preferred outcomes. Additionally, exchanges might restrict the odds to limit the potential payout from large wins. This can be a downside for punters looking for high-risk, high-reward betting opportunities.
Odds and Market Dynamics
Lastly, betting exchanges often provide better odds compared to traditional bookmakers. This is because the odds on exchanges are determined by the punters themselves, creating a free market environment.. They do this with the use of decimal betting odds. In contrast, bookmakers set their own odds. This dynamic often results in better value for customers on betting exchanges, which is a significant reason for their growing popularity among bettors.
A Brief History of Betting Exchanges
The concept of betting exchanges gained traction around the turn of the millennium, with several major players emerging over the years. This development highlights the appeal of betting exchanges for punters seeking fairer, more transparent betting opportunities.
Betfair
Betfair, founded in 2000 by Andrew Black and Edward Wray, is one of the most prominent betting exchanges. By 2014, Betfair’s revenue had reached £393 million. It was the first betting exchange to be listed on the London Stock Exchange, prior to its merger with Paddy Power in 2016.
Betfair is now the largest betting company in the UK and the biggest betting exchange globally, boasting over 4 million customers and 1,800 employees. Betfair is recommended for its stability, user-friendly interface, diverse market options, and substantial betting volume.
Smarkets
Headquartered in London, Smarkets is a notable up-and-comer in the betting exchange industry. It positions itself as a sophisticated trading platform, leveraging advanced technology. Smarkets has gained popularity due to its competitive commission rates and is steadily growing its user base.
Matchbook
Based in Cork, Ireland, Matchbook may not have the same global footprint as Betfair, but it still holds a strong position in the market. Matchbook offers an excellent range of American sports markets and competitive commission rates, making it a solid choice for bettors.
Other Exchanges
There are several other betting exchanges in operation. While Betfair, Smarkets, and Matchbook are among the most popular, others like BETDAQ also maintain a significant following. Founded around the same time as Betfair in 2000, BETDAQ has carved out its niche, albeit not reaching the same level of prominence.
Conclusion
In summary, while betting exchanges share many similarities with traditional bookmakers, their key differences—particularly in terms of how they generate revenue, the flexibility of betting options, and the determination of odds—offer substantial benefits, especially for matched bettors.
Betting exchanges play a crucial role in providing fairer and potentially more lucrative betting opportunities, making them an integral part of the betting landscape. For matched betting, they’re perfect!
