Betting exchanges can appear daunting, however once you know how to bet on a betting exchange your experience and value opportunities are enhanced whether you're a casual punter, serious sports bettor or a trader.
Betting exchange explained
A betting exchange like Smarkets is a peer-to-peer platform which allows you to bet or trade on the outcome of events.
In contrast to a bookmaker, betting exchanges allow you to bet against each other rather than a bookmaker - you can act as a bookmaker by setting odds for an event, or the customer by backing the odds set by other users on the exchange.
How does a betting exchange work
Betting exchanges work by providing a platform that pairs bettors against each other. The exchange will then charge a commission for using this service - Smarkets charge an industry-low 2% commission - on net market profits only.
When betting on an exchange you have the ability to both back and lay the outcome. This provides a level of flexibility, which isn’t possible with a bookmaker.
A betting exchange works by matching bettors with differing opinions on the likelihood of an outcome and allowing them to agree both the stakes and the odds, so they can bet without the need for a bookmaker.
Betting on a betting exchange
Betting on a betting exchange is very simple, and is similar to betting with a bookmaker. When betting on Smarkets you can place back (for) bet by selecting the odds in the green box.
When placing a back bet you are betting that the outcome will happen - for example betting for on Tottenham to beat Swansea at odds of 1.26 in the Premier League.
So if you placed a £120 stake on Tottenham to win, you would return £151.19, with a profit of £31.19, minus 2% commission - learn how to calculate betting exchange commission here.
Lay betting - read our in-depth lay betting guide - allows you to take the same position as a traditional bookmaker, by offering odds to other exchange users. In its simplest form lay betting is the reverse of placing a traditional bet - you lay an outcome you believe will not happen.
All you need to do to place a lay bet on Smarkets is to select the blue box which displays the current lay odds. Our example shows a £120 stake at 1.27 for Tottenham not to win - if the game ends in a draw or Swansea win, your bet wins.
If you placed this bet you would stand to win £120, with a return of £152.40 because of your £32.40 liability - the amount you stand to lose if your bet is unsuccessful.
Setting your own odds
Although best available prices are displayed on a betting exchange, you can set your own odds regardless of whether there are odds there or not - something you can not do on a bookmaker.
There is no guarantee that your bet will be matched, but you can input the odds you believe are true and see if the market moves that way.
Apply this to betting
Now you understand how easy it is to bet on a betting exchange, you should be able to recognise the differences between bookmakers and betting exchanges, and take advantage of the exciting opportunities exchanges present, and the best odds online - which is what Smarkets offer with our industry-low 2% flat commission.