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Betting Exchanges

Understand Betting Odds and Betting Exchanges

The betting industry is a huge worldwide industry. Betting shops or bookmakers line the streets of the world (at least in countries where betting is legal) and with the growth of online betting where people can place a bet from the comfort of their homes, on their computer or even on their mobile phone, it’s unsurprising that more and more people are starting to bet. But a common question that betting newcomers tend to ask is how to understand betting odds.


First of all, let’s clarify what the odds of a bet refer to. The odds are set by the betting company or bookmakers who have a team of experts to make calculated estimations of what chances the bet has to be successful. For example, if a horse has a track record of being very fast, and has won a lot of races then the bookmakers will set short odds for the horse to win the race. Short odds mean your bet or stake will only yield a slight profit. On the other hand if the horse is very old and has a noticeable limp then it will have long odds and in the unlikely event that this horse wins, you will make a large profit.

Another critical factor to consider is that the odds of a horse or football team or whatever you bet on, will change up to the final result of the race or game, because the betting company or bookmakers will change the odds depending on how much money is being placed in bets on the horses or teams involved in the bet. If a significant number of people place a lot of bets on a horse, the odds will become shorter for that horse as the bookmaker wants to protect itself in the case of this horse winning the race. The shorter odds means they can pay out a smaller profit to the large number of people who placed bets on that horse.

Fractional odds

Now let us examine the numbers that comprise the odds so we are aware of how to understand betting odds in relation to simple examples. If I want to bet on a football team to win a game and the odds or price for the team to win is described as 11/4, this means that for every £4 I bet on that team to win I will make a profit of £11. This means that I will receive a total of £15 from the betting company (£11 profit and £4 original bet/stake returned).

However, if the team I bet on loses or ties the game I lose my £4. Please also be aware that in some countries you will have to pay a small tax on your bet or have a small tax deducted from your winning profit or winnings. It’s also worth mentioning that if the odds are 11/4 that it doesn’t mean that you have to bet £4, you can bet any amount you like (some betting companies however have a minimum bet threshold) but the result will be calculated on the 11/4 ratio. For example if you bet £10 then your profit if the bet wins (before tax) will be £27.50.

Decimal Odds

Traditional betting odds are based on fractional ratios like 11/4 or 10/1 (place a bet of £1 and if your bet is successful your profit is £10). If a horse or sports team or fighter or whatever (it’s possible to bet on almost anything these days) is very likely to win or happen, the bet will sometimes be odds on, which means your winning profit will be less than your original bet or stake. For example if Brazil were playing Luxembourg in a football match most people would expect Brazil to win and therefore they would be odds on, maybe the odds would be 1/10, meaning that if you bet £10 on Brazil to win the game your profit would be just £1.

Some online betting companies like Betfair have adopted a new system to display odds that is based on decimals and if you want to know how to understand betting odds you should be aware of how decimal odds work too. Decimal odds reflect your total winning return (that is your original bet plus the profits or winnings of that bet). So if a horse has decimal odds of 11.50 it means that if you bet £1 you will receive a return of £11.50 (£10.50 profit/winnings plus your original stake or bet of £1). This form of odds calculation is much simpler to understand than the traditional fractional odds associated with betting and is becoming more commonplace in the betting industry. Hopefully you now have a solid grasp on how to understand betting odds but always remember to try to bet responsibly and that ultimately the bookie or bookmaker always wins so don’t count on making your fortune from betting just yet.

Betting Exchanges Explained

Betting Exchanges transformed the traditional ‘bricks and mortar’ bookmaking profession. By matching individuals with each other, it was possible to cut out the bookmakers profit margin, meaning both gamblers bet with bigger odds. A revolution was started and the number of opportunities for successful betting increased vastly.

According to website, a Betting Exchange is a very simple concept. Ultimately, the exchange matches individuals to bet against each other. If one user takes a certain view on an event, and another disagrees, a bet can be struck. The sheer volume of people using the betting exchange sites means that prices are always available, and if the odds available are not satisfactory, users can enter their own and wait to see if they are ‘matched’ later.

The concept was so revolutionary because it removed the bookmakers profit margin or ‘over-round’. This percentage is often substantial so once gone, it led to prices that were 20% higher on the exchanges compared to traditional bookmakers.

It also allowed gamblers to ‘lay’ selections. ‘Lay’ means simply to bet against an outcome, or offer odds (and act as the bookmaker). This was never an option for punters previously, and it opens up a wealth of opportunities.

Betting Exchanges have now been in operation for over 10 years and traditional bookmakers have caught up. Most exchanges operate a commission system to make their money, usually 5% of any winning bets. This, coupled with tighter margins from the high street bookmakers who have to compete, has closed the gap on prices – but in the main, exchanges still have a slight edge on value.

Betting Exchange Differences

The Exchanges often appear bewildering to people more at home with traditional odds, even online. The confusion is caused by the user being presented with a series of numbers, some of which may be changing regularly.

These numbers represent the odds on offer. Those nearest the centre of the page are the prices available currently, numbers nearer the edge represent odds that other users have requested – but have not yet matched. Both sides will be clearly marked as to whether the odds are to ‘back’ or ‘lay’.

These figures are also accompanied by a currency total underneath. All the additional information is to indicate the amount of ‘liquidity’ in the market. With this extra data, a gambler can make an educated guess as to whether they can make the bet they want, or possibly hold out for an even better price.

Popular betting markets will have huge sums available and the price volatility will be minimal. Odds on low key events with smaller amounts of money available can swing wildly if someone wants to make a large bet.

Betting Exchanges also created the concept of betting ‘in running’. This is where bets can be made during the event, as it is happening. The odds available ‘in running’ will fluctuate hugely, but there are often opportunities for the astute gambler to take advantage of over reactions to what has occurred during the ‘in play’ event.

The ability to lay bets also adds the option of ‘trading’. If a user can back a selection, and then lay the same selection later when the odds have changed, it is possible to make a profit regardless of the outcome – assuming the odds moved in a favorable direction.

The option to effectively trade bets, in the same way as stocks might be bought and sold, fully illustrates the scale of the impact that betting exchanges have brought to the industry.

In essence, Betting Exchanges have taken gambling back to its purest form. Where two people might have had a difference of opinion, and struck a bet, the exchanges now bring them together online. The biggest differences include the ability to request odds, the opportunity to lay, as well as back selections and the option of trading bets over a long period. A gambler serious about making a profit and maximizing performance must learn to use the exchanges.

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