A betting exchange is an online platform where gamblers can directly place bets against each other and set odds themselves as opposed to against a traditional bookmaker. Such exchanges give punters and bettors more control over their bets and eradicate any role played by bookmakers.
A revolutionary gambling concept that can be traced back to the start of the 21st century, betting exchanges are essentially a people-to-people exchange facility that allows punters to connect and make offers to each other that are based on crowds and punters’ wisdom rather than being predetermined by bookmakers.
Such platforms enable the maximization of profits for punters and understandably upsets bookmakers since they don’t get their piece of the pie which they would via the traditional bookmaker methods of betting. As far as the platform is concerned, it generally charges an industry-low commission on the net market profit.
As already mentioned, betting exchanges are based on a peer-to-peer principle that allows punters to have equal chances of success and create their own markets. The nature of such an exchange betting facility invariably makes it more transparent and fair, offering better winning opportunities with no limits, unlike the traditional bookmakers’ route.
Which was the first betting exchange?
Flutter.com was the first betting exchange to capture punters’ imaginations and push conventional boundaries. It was founded in 2000, with a first office in London with the website going live in May shortly before Betfair was launched.
Although an online start-up, Flutter pioneered the person-to-person betting model approach, where users took the place of bookmakers to lay down odds in what was at the time a never-before-seen experiment prior to the turn of the millennia.
The odds were taken up by other users, with the hosting company taking a commission on the winnings. Flutter would offer odds in fractional form as opposed to its rival betting exchange Betfair - who followed the decimal odds system.
After deciding to outsource its system to Hanston, an Oracle database support and consulting firm, Flutter’s website grew to be quick, easy and intuitive. However, come Christmas 2001, Flutter merged with Betfair before going on to become the leading betting exchange marketplace.
The launch of Matchbook in 2004 opened the door for multiple betting exchanges to take the initiative and set up bases in Europe or around the world.
While betting exchanges initially started listing bets for horse-racing and football, the continuous growth of the internet and networking applications enabled exchanges to expand their portfolio to multiple sports as well as landmark events around the world.
As of 2021, Betfair is the top betting exchange in the international market followed by Ladbrokes and 1xBet.
The popularity of these betting exchanges have enabled them to branch out into significant tie-ups, such as Betfair being the official partner of CONMEBOL club competitions - CONMEBOL Libertadores and CONMEBOL Sudamericana - till December 31, 2022. They were also previously the sponsor for the English football team Sunderland.
Ladbrokes served as the principal sponsor of the Scottish Professional Football League while 1xBet, by far, has the biggest portfolio for such tie-ups. These include being betting partners of English giants Chelsea, Tottenham, Liverpool, Cardiff, Spain’s FC Barcelona and France’s Olympique Lyon. The Cyprus-headquartered betting exchange firm also inked partnership deals with the Serie A (Italian football’s top-flight) and CAF (Confédération Africaine de Football).
India, for one, has welcomed the operations of betting exchanges. 1xBet, BetWinner, Betadda, FairPlay, Fun88, Indibet and Cricex are some of the betting exchanges that are popular and running in the Indian market.
1xBet made their plunge into the Indian exchange market by announcing Trinidad and Tobago cricketing icon Dwayne Bravo as its first ambassador from the subcontinent.
How does a betting exchange work?
While betting exchanges offer almost similar opportunities to place bets as opposed to a traditional bookmaker, there are a few differences as well. In a betting exchange marketplace, gamblers can purchase the odds they think will generate the best outcome or purchase the odds that are expected to lose.
To get a better understanding of betting exchange, let us take an example of a cricket match between India and Australia, where you expect India to win.
Instead of placing a bet on India to win, you can simply lay a bet on Australia to lose the match. This bet is matched by another wager in the online marketplace, making it a win-win situation of sorts for all parties.
Features of betting exchanges
When the customer places a bet for an outcome to happen, it is known as back betting. For example, if a person bets on FC Barcelona winning a match against Real Madrid, he/she wins the bet only if Barcelona beats Madrid.
When the customer places a bet for the outcome to not occur and plays the role of the bookmaker, it is known as lay betting. For example, if a gambler bets that FC Barcelona will not defeat Real Madrid, he/she wins the bet only if Madrid wins or the match ends in a draw.
As the name suggests, in-play betting exchange allows bets to be made in real-time or while in-running. These bets can happen when a match or event is in progress and usually takes place in the more popular sports that are televised the world over. Conversely, non-in-play bets happen when they are entered into the system soon after they are placed by customers.