Exhaustive Information about Betting Exchanges for Beginner Gamblers

Betting exchanges have become extremely popular across the whole world proposing a good alternative to traditional gambling. However, even with this, not all the people perfectly understand what the betting exchanges are and how they work.

Betting Exchanges Explained

The betting exchanges apply an approach that differs from that provided by usual bookmakers where a bookmaker and a gambler are opponents. While the bookmakers use the services of well-informed raiders in order to fix odds for every single market, the betting exchanges offer a custom platform both for bookmakers who offer their odds (laying) and for bettors who accept the odds offered by other exchange users (backing).

To perfectly understand the general principles, let us get acquainted with an actual example. Gambler A believes that Arsenal will not beat Manchester City and offers the odds of 4.00 on the Gunners to win. In this case, the risk ratio will be 3 to 1 for every wager against Gambler A. At the same time, Gambler B is sure that Arsenal will win and places $1 at 4.00. Then, a betting exchange confronts the given wagers. So, if Arsenal wins, Gambler B will obtain $4 returns. If the team loses, Gambler A will obtain $1.

Efficiency of Betting Exchanges

According to various studies, this equal exchange model results in almost fully effective market because an event potential probability (frequency of a given event) is compared to offered odds with a slight deviation. It means that if you follow a constant betting system with a 50% probability, you will level your finances in a long distance. The possibility to gain profits becomes higher thanks to such advantages as ability to deal with handicapping or special information possession.

It can refer to established markets, but initial odds are often less effective because the amount of bettors and degree of liquidity (funds available to place bets) are quite insignificant to efficiently balance the market. In other words, the betting exchanges punish (for backing) or award (for laying) gamblers who placed their wagers extremely early.

Margin of Betting Exchanges

In spite of the market effectiveness, betting exchange incomes disappear due to a 5% commission fee applied for winning bets. Since it refers only to winning amounts, the fees are not included in odds. As a result, the exchanges place much longer odds compared to the real state of affairs.

Considering the fact that an average fee amounts at 5%, an ordinary gambler should place at least 51.3% of successful bets in order to gain long-term returns. With this, the betting exchanges are not serious rivals for usual bookmakers who imply only 2% fees. Dealing with the bookmakers, punters need win at least 50.5% of their bets in order to rely on significant benefits from sports gambling.