In the recent past, there has emerged a new type of betting company which is close to the traditional bookmakers known as the betting exchange. With the betting exchange you won’t be betting directly against a bookmaker as it’s the case traditionally, but rather you will cut the middle man and bet with other sports betting fans. Besides, you can play a bookmakers role and offer you own betting odds.
Advantages of betting exchange
• It is possible to sell made bets and be rewarded handsomely before the match you had placed your bet on starts
• You won’t have to worry about the bookmakers profit in this case since you can conveniently find higher odds compared to the regular bookmakers.
• Given the way betting exchange work it’s much easier to play the role of a bookmaker if you are looking to take an alternative route on your sports betting
• With the advantages of betting exchange software, you can bet against other punters compared to a bookmaker
How do betting exchange odds work?
Take a scenario of rolling a dice or flipping a coin where you and partner put a five on the coin then toss. One will call the tail, and the other gets the head and whoever gets it right in such an instance wins €10. In this case, you agreed on heads for €5 and another €5 for a win, and this means that the odds you received are either even or 2. In any case, if you land tails, you loose the fiver, and if you land heads, you win the fiver.
The situation, however, changes when the odds aren’t even or when there is more than one option. For instance, if you pick a number on a standard dice in which your partner has to pay each time it lands on a six then the odds won’t be even or 2 because that’s not fair since you’ve five chances of losing one chance of winning. This means that if you put down the €1, then your partner risk €5 and so the odds are 1/5 or 1.2.
True odds such as 5/1 v 1/5 depict an efficient market, and this happens when the cash going to the market is equivalent to the money being paid out with no profits taken out. Such efficient betting markets hardly exist outside the betting exchanges with betting coming down to the risk vs. rewards. If you lay down a 2, then you are to win more if you are right, and it’s more likely to happen compared to a 6.However, laying a 6 should cost you more suppose that’s the result.
Liquidity vs. Efficiency of betting markets
According to different studies, the peer to peer exchange markets usually results in a close to perfect markets given that the implied probability of events resembles the odds offered with a slight variation. This implies that if you do follow a consistent betting system that has a 50% probability of tossing a coin you should be all square in the long run.
If you are looking to turn a profit, then you’d want to first factor in the advantages of privileged knowledge and handicapping skills. This is valuable especially for mature markets but new markets are usually less effective given the level of liquidity and that the number of bettors is too low to balance with the market. This means that early bettors are punished or rewarded depending on whether they are lay betting or backing.
Hidden costs in betting exchanges
Putting aside market efficiency, the benefits of the exchange will fade if you include the commission exchange charge on the winnings which can be up to 5%. Since it only affects your winnings, they aren’t considered in the odds which make them have better value than they are. If you do have an average commission rate of 5%, then it means that your average bettor needs at least 51.3% to achieve long-term probability. Even with such a rate, it’s no match for low commission bookmakers that feature a 2% commission which translates to about 50.5% in terms of long-term profitability.
With this brief outline on how betting exchange works and how it could greatly benefit your betting regime, it should enlighten you to have a fine grounding and start off your trading on a betting exchange. There are also different websites and other online platforms where you gain more knowledge to gain pro skills in betting exchange.