Betting
exchanges are a fairly recent development in betting, because
they are something that rely heavily on computer technology
and the internet. As the name suggests, betting exchanges
are places where individuals exchange their bets with others.
This means that individuals can "lay" competitors to lose
an event, as well as "bet" on competitors to win an event.
For example, if you think that Manchester United will beat
Arsenal, you could visit a betting exchange and see what sort
of odds other people are offering on this outcome. You may
find that an Arsenal fan is offering odds of 3.0 (2/1) and
decide to make that bet for £10. If Manchester United win,
then you win. Otherwise the Arsenal fan gets to keep your
£10.
Betting exchanges have no financial interest in the event
itself. They make their profits by managing the exchange environment
and charging a small commission on the profits achieved by
all users. This charge is usually in the region of 4-5%, and
is certainly less than the over-round you'd have to fight
against with a sportsbook. And of course, because the exchanges
has no vested interest in who wins and who loses, they never
ban winning bettors.
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