A Guide To Laying

What is a betting exchange?

The betting exchange phenomenon is possibly the most striking development in any part of e-commerce since the dot com revolution. While the proliferation of on line sites now allow the consumer to do transact business from their home as opposed to physically on the high street, the advent of exchanges has facilitated frankly the largest revolution in a previously conventional industry anywhere in the world. Put simply, the dawning of the betting exchanges has been the single largest development

The launch of the first betting exchanges came in 2000 most notably with Betfair.com and Flutter.com which allowed what was then referred to as “peer to peer” betting, that is punters betting against one another as opposed to with a traditional bookmaker. Most notably, they facilitated the ability, through an on-line platform, of punters to become, in effect bookmakers, offering their own odds and crucially market making during an event based on their own liabilities.

The exchanges themselves are simply as the name might suggest the environment by which these transactions take place. They do not accept a bet, market make, nor do they have any liabilities on any event. They are simply the virtual bricks and mortar by which punters can bet with each other. They charge a commission much like a broker for this facilitation; this commission structure is based on the amount of turnover historically transacted with the exchange and normally ranges between 5% at the outset to 2% at the lower end. The commission is only charged to the successful punter in the transaction and commission is charged on the profit made on the bet.

Punters must trade with cleared funds, and the platform shows available prices and the liquidity available at these prices. Once the punter has decided his selection in an event, he will request either a price he would like to have, either backing or laying or a price that is currently available. Once that proposed bet is accepted by another punter, then the bet is said to have been matched and the bet struck.

The largest betting exchange in the world is the UK based behemoth, Betfair.com which has well over 90% of market share. Betfair was founded by professional punter and computer genius Andrew Black, but it wasn’t until they merged with the better funded flutter.com that their fortunes really began to take off. They now are the undisputed leading betting exchange were liquidity is key. Betfair has over a million clients globally and has turnover in excess of £50m per week. Betfair have won a Queen’s Award for Innovation and have led the discussions with authorities all over the world regarding their legitimacy.

Betdaq, owned by Irish multi-millionaire Dermot Desmond and based in Dublin is the second largest betting exchange globally. Betdaq have been haunted by technical issues since their launch and while they can legitimately claim to have substantial liquidity in soccer in particular, they lag significantly behind in the wake of the Betfair operation.

The newest exchange kid on the block is the wbx.com offering. The grandiosely titled World Betting Exchange, finally launched in 2006, after nearly 200 sponsored horse races telling us that it was coming soon. The site has a lot to offer and is easily navigable etc, but in the highly competitive world of exchanges, they have a long way to go to match the liquidity offered elsewhere.

The power of an exchange is that it gives the consumer choice. For the first time, consumers can act as bookmakers, how often have you heard, “I don’t know what is going to win the race, but I know what won’t.” This is where the exchange comes into its own; put simply the punter can make money by backing a horse to lose. The in-running component of the exchanges is also a dramatic revelation allowing punters to bet at various points within an event, either as a new bet or in managing their profit and or liabilities. All of these points we will focus and elaborate on through later specific chapters.

Are exchanges legal? This is a question posed all the time by punters. Strictly speaking they are not as people laying horses to lose, or acting like bookmakers should technically hold a bookmaking license. However, through skilled diplomacy, good lobbying, excellent PR and their own success, the exchanges have managed to convince the authorities of their bona fide legitimacy. Put simply the exchange holds a bookmaking license which allows its members to trade on its platform. This is much to the chagrin of the largest high street bookmakers who have declared foul play and preferential treatment; however their accusations are based on a fear of falling profits not legality. Exchanges as far as the authorities are concerned are legal, the hold a license, contribute to the Levy and most importantly are here to stay.
The launch of the first betting exchanges came in 2000 most notably with Betfair.com and Flutter.com which allowed what was then referred to as “peer to peer” betting, that is punters betting against one another as opposed to with a traditional bookmaker. Most notably, they facilitated the ability, through an on-line platform, of punters to become, in effect bookmakers, offering their own odds and crucially market making during an event based on their own liabilities.

The exchanges themselves are simply as the name might suggest the environment by which these transactions take place. They do not accept a bet, market make, nor do they have any liabilities on any event. They are simply the virtual bricks and mortar by which punters can bet with each other. They charge a commission much like a broker for this facilitation; this commission structure is based on the amount of turnover historically transacted with the exchange and normally ranges between 5% at the outset to 2% at the lower end. The commission is only charged to the successful punter in the transaction and commission is charged on the profit made on the bet.

Punters must trade with cleared funds, and the platform shows available prices and the liquidity available at these prices. Once the punter has decided his selection in an event, he will request either a price he would like to have, either backing or laying or a price that is currently available. Once that proposed bet is accepted by another punter, then the bet is said to have been matched and the bet struck.

The largest betting exchange in the world is the UK based behemoth, Betfair.com which has well over 90% of market share. Betfair was founded by professional punter and computer genius Andrew Black, but it wasn’t until they merged with the better funded flutter.com that their fortunes really began to take off. They now are the undisputed leading betting exchange were liquidity is key. Betfair has over a million clients globally and has turnover in excess of £50m per week. Betfair have won a Queen’s Award for Innovation and have led the discussions with authorities all over the world regarding their legitimacy.

Betdaq, owned by Irish multi-millionaire Dermot Desmond and based in Dublin is the second largest betting exchange globally. Betdaq have been haunted by technical issues since their launch and while they can legitimately claim to have substantial liquidity in soccer in particular, they lag significantly behind in the wake of the Betfair operation.

The newest exchange kid on the block is the wbx.com offering. The grandiosely titled World Betting Exchange, finally launched in 2006, after nearly 200 sponsored horse races telling us that it was coming soon. The site has a lot to offer and is easily navigable etc, but in the highly competitive world of exchanges, they have a long way to go to match the liquidity offered elsewhere.

The power of an exchange is that it gives the consumer choice. For the first time, consumers can act as bookmakers, how often have you heard, “I don’t know what is going to win the race, but I know what won’t.” This is where the exchange comes into its own; put simply the punter can make money by backing a horse to lose. The in-running component of the exchanges is also a dramatic revelation allowing punters to bet at various points within an event, either as a new bet or in managing their profit and or liabilities. All of these points we will focus and elaborate on through later specific chapters.

Are exchanges legal? This is a question posed all the time by punters. Strictly speaking they are not as people laying horses to lose, or acting like bookmakers should technically hold a bookmaking license. However, through skilled diplomacy, good lobbying, excellent PR and their own success, the exchanges have managed to convince the authorities of their bona fide legitimacy. Put simply the exchange holds a bookmaking license which allows its members to trade on its platform. This is much to the chagrin of the largest high street bookmakers who have declared foul play and preferential treatment; however their accusations are based on a fear of falling profits not legality. Exchanges as far as the authorities are concerned are legal, the hold a license, contribute to the Levy and most importantly are here to stay.