EXCHANGES by Alex Deacon of

The Racing and Football Outlook

It's fair to say that the past five years have seen the world of betting change almost beyond all recognition - in ways that we could not possibly have anticipated a decade ago. Chief amongst these changes, and one wrought from the explosion of Internet betting, has been the introduction of betting exchanges.

The betting exchanges differ from the traditional bookmaker in that punters can act as bookmakers, by offering their own set of odds or prices (what is known as laying a bet) in the hope that a backer will come forward and match that bet at the price specified by the layer. For example, you might not fancy the chances of Team A against Team B and offer people the chance to bet on Team A by laying your own odds on them. Alternatively, punters can act as backers in much the same way as you do with the bookie and match bets with those people laying bets.

While the concepts behind the exchanges might still seem alien, all of the established exchanges have extensive help and tutorial sections for new users and anyone dipping their toe into the water for the first time is well advised to avail themselves of exactly how the exchange works before putting down any of their hard-earned. That said, after a short time, the slightly different way of betting soon becomes second nature to even the most inexperienced punter.

Of the established betting exchanges, Betfair has very quickly become the market leader with a dominance of the market eclipsing the efforts of their nearest rivals, the Irish-based company Betdaq. The dominance of Betfair means that smaller operations suffer in a way that smaller online bookies of the traditional variety do not. This happens because, without sufficient money in the market, backers and layers find it difficult to make the bet they want. This in turn creates a vicious cycle whereby exchange punters gravitate to the one place they're almost certain to get the bet they want i.e. at Betfair or Betdaq.

Playing on the exchanges can be as simple as backing your fancies with a traditional firm, at what are probably more attractive odds. Even taking the exchange’s commission into account, doing so may give you more bets for your pound than you'd get from your local High Street firm. However, unless you get involved with laying as well as backing, you probably won’t become more likely to win overall. The shrewdest operators on the Exchanges back at a high price and then lay the same event at a lower price thus guaranteeing themselves a locked-in profit.

While there is so much to be positive about with the exchanges, one area in which they do disappoint football punters in particular is that they are absolutely hopeless as a medium for stringing together a decent accumulator or multiple bet. Whereas your local bookies will be willing to lay all manner of exotic permutations and combinations, including some dreamt up by SoccerLotto’s very own Perman, the model by which the current exchanges operate does not allow for anything much more sophisticated than the laying of a limited number of doubles within a specific competition. While daily doubles have proved popular during the big events such as the World Cup or European Championships, multiples remain one of the (many would argue the only) area of betting in which the exchanges come up short and in which the paper coupon remains king.
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Where the exchanges do work however is in allowing the clued-up punter to take advantage of their knowledge by taking the end of the bet that is most attractive to their assessment of the odds. This in turn has resulted in the increased popularity of a new style of betting which owes more to the practice of stock market trading than it does to having a bet on a bookmaker's coupon.
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The sports trader is not someone obsessed with the matter of which team will win or what the score will be. Rather they'll have an idea of a price for a team and, depending on what way the market is going, they'll either back or lay on that criteria alone. What this usually means in the context of a football match is that football traders, like the bookie, are making the majority of their bets in opposition of the favourite team or scoreline. One example of this, that will seemingly never go away, is in games were we find two evenly matched teams and in which it is almost always possible to lay the 1-1 correct score at a price one or even two points shorter than what would be a more realistic or "true" price.

Where the trader comes into his or her own however is by playing in-running and by taking advantage of volatile changes in odds that come about when a goal is scored or a player sent off. At these times what is usually an efficient set of odds (i.e. the margin between the back and lay prices is very tight) break rank and it's possible for the clued-up punter to step in and match bets at what are unrealistic, and consequently value, odds. To be successful at this requires an intimate knowledge of the game and an understanding of odds, but more importantly an ability to step back calmly from the hype and excitement in order to rationalise what the state of play in the game really is.

For example, time and time again when betting in-running, one finds oneself laying teams who've opened the scoring in a game at odds much shorter than they should be merely on account of backers who are too easily swayed by their short-term view of the game into assuming that because a team has scored first, it must go on to win. While you can't get it right all of the time, one finds that, despite the swings in fortune that occur, at the end of the day this style of betting can be very successful.

The ability to take advantage in this way isn't restricted to football. In-running betting has its converts across a wide range of sports from horseracing to F1. All, though, are seeking to take advantage of the inherent unpredictability of sport and the inclination of the massed ranks of punters (usually backers) who are too ready to step in and take bad odds simply by over- or underestimating the significance of an event. At times it's even possible to get a value bet matched on account of a commentator or summariser's comment during a game.

While the majority of bookmakers would like betting exchanges to be subject to some sort of regulation in terms of who is able to lay bets, it's unlikely in the near future that significant restrictions will be placed on those punters wanting, understandably, to play both sides of the line. The early days of the betting exchanges are however over. Gone forever is the gold-rush feeling of those early days when it seemed there was a constant supply of people lining up to take bad odds from you. With their popularity has come a greater awareness from punters in pricing up a game or a race and consequently the opportunities to make significant profits are reduced. Nevertheless, the chance to do so remains and more so I would suggest than when trying your luck with the bookmaker. Quite simply, for the price-sensitive punter, betting exchanges should be, almost with exception, the sole choice of betting medium.