What are Bookmakers and Betting Exchanges?
Nowadays, bettors can place their bet anywhere they like as there are numerous options to do so. However, if you're new to the industry, perhaps you didn't know that betting sites can be broken down into two main categories. The traditional bookmakers and betting exchanges are both massively popular and offer different takes on how you can place bets.
There are plenty of reasons why you should choose both, but if you're not sure what the key differences are, we'll be looking at them in detail through this article. Let's start off by looking at the basic differences between a bookie and a betting exchange.
Traditional Bookmaker
If you've placed a bet or two, you'll likely be familiar with what a traditional bookmaker is and how it works. Perhaps you've heard of bet365 and William Hill. These are household names of traditional bookmakers and the gameplay is quite simple.
With traditional bookies, all you need to do is place a bet on the odds given by the bookmaker. This means that you're competing against the bookie.
No matter what sports you're betting on, whether it's football in the 1x2 market or Each-way on horse racing, you're playing against the bookie. You win if the bet comes through, but if the bet loses, the bookie wins.
Betting Exchange
Betting exchanges work a little differently. There are way fewer of them to play at, with Betfair Exchange as the most recognizable betting exchange.
Unlike traditional bookies where you need to bet against the bookmaker, betting exchanges let you play against other bettors. This works by having you set the odds and the other person needing to match them. Then, the loser pays out the winner.
Main Differences Between a Bookmaker and a Betting Exchange
Even though betting exchanges have been around for 20 years, many bettors still prefer using traditional bookies to placing their bets. Now, let's move on to the main differences between a betting exchange and a traditional bookmaker.
Placing Bets
If you're used to betting on a sportsbook, you'll find a different betting experience when betting on an exchange. We've listed the pros and cons of the differences in placing bets between the two.
You Can Back and Lay Bets on Betting Exchanges
The biggest difference between the two betting methods is that an exchange lets you lay bets, while you can only back at a regular bookmaker. Laying a bet is acting as a bookmaker and taking other bettors' bets on an outcome, which you need to effectively bet against. For example, if you're laying on Chelsea, that means you're betting against them, betting on a draw or for the other side to win.
Betting Exchanges for Hedging Your Bets
A betting exchange was traditionally the best way to hedge your bets, whether in-play, mid-way through an event or before it even started. However, more betting sites nowadays offer cash out or partial cash out options. This feature provides some flexibility that's similar to exchange, although you won't receive as much as you would from an exchange. Even though it's easier to cashout a bet than hedging it on an exchange, the returns you get are usually slightly lower at betting sites.
Betting Exchanges Offer Decimal Odds Only
Most betting sites in the UK use fractional odds such as 6/5 or 9/2 as their standard odds. On the other hand, betting exchanges only use decimal odds like 2.40 or 1.80.
Today, most betting exchanges let you see a fractional estimation of the odds when you're hovering over the markets. However, there is significantly more flexibility within traditional bookies as most of them offer the option between decimal, fractional and American odds.
Traditional Bookmakers Offer Simpler Ways to Place Bets
A betting site offers easier ways to place your bets in many ways as the bookie quotes the odds, which is the price you'll receive. In reverse, you will need liquidity to place your bets at betting exchanges. This means that you must prepare an exchange user to lay the bet you want to put, especially on less popular markets. This may sometimes be a problem.
Betting Exchanges Offer Better In-Play Betting (If the Liquidity Exists)
As betting exchange's odds are controlled by the market instead of the bookie's employee, it's easier for exchanges to provide in-play betting. This means you'll receive a wider variety of markets on more events and matches. Thus, while the standard betting sites have dramatically improved their in-play offering, the exchanges still offer the edge (if there's enough liquidity).
This is where the problem lies with betting exchanges, as you need someone to be willing to take your bet. In-play bets on smaller matches may cause you to struggle to place any bet at all, especially if it's a market that doesn't get much attention. You don't need to worry about this with traditional sportsbooks.
Odds and Margins
So, where does the best value lie? This is one of the biggest considerations when deciding between a regular sportsbook or an exchange. Here is a list of what to look out for.
Betting Exchanges Usually Have Better Odds
More returns and better odds have always been the highlight of betting exchanges and don't include a middle man (the bookie) who takes a portion of your money. Odds are also usually better at exchanges because the commission is charged on the winning bet. In regular bookmakers, you’ll receive charged commission at the moment you place a bet.
However, this isn't always the case, especially at bigger events. But bets at long odds like correct scores in football and golf markets, betting exchanges usually have the winning edge, usually by a considerable margin.
Exchanges Don't Offer Free Bets, Bonuses or Promotions Often
Generally, betting sites offer more options such as regular free bets, offers and bonuses compared to betting exchanges. The betting exchange's business model simply doesn't allow it to implement such promotions, even though the success some betting exchanges receive should allow them to compete to some degree.
Betting Exchanges Don't Set Any Limit Except Liquidity
We should consider the limit roundabout to the liquidity swing. Although liquidity may be an issue when using a betting exchange, you can also find similar issues in a different guise at bookmakers: betting limits.
As long as there's cash available on the other side of your bet on a betting exchange, you can bet as much as you want. Even up to millions of dollars on the famous markets. In contrast, a bookie limits the number of bets you take. This limit varies depending on the market, the bet, and most importantly, the customer – with successful bettors usually seeing their accounts limited to tiny bets.
Besides the low limits, another sanction traditional bookies can use against their profitable customers is to ban them. Bookmakers usually send an email to tell these customers or any targeting markets where the odds are beyond the line that their business is no longer allowed at the bookie. Note that this is perfectly legal even though it seems unfair and there is no obligation for a bookmaker to accept your bet.
On the other hand, a betting exchange will never ban their customers (besides fraud), no matter if they're betting in large amounts and how successful they are in their bets.
How About Commissions?
Indeed, you pay commission at a betting exchange, but usually only for winning bets but other times on all bets at some smaller exchanges. On the other hand, a bookie's odds effectively build the commission or margin, which means your returns are easier to work out as there aren't any further deductions. Therefore, a regular bookmaker may be the best option if you're not into counting numbers and prefer to keep things simple.
Traditional Betting Sites vs Betting Exchanges: Which Should You Choose?
So, which one is better after all the things we've mentioned above? A traditional bookmaker or betting exchange? The truth is, one is not better than the other or worse. It all depends on what you're looking for when placing a bet:
Bookmakers are the perfect choice if you like to get bonuses, simple to use sites and the feature to place a bet regardless of who else is betting on the event. The introduction of cash out has also enhanced the experience as it allows you to instantly hedge without needing to add more funds to cover the additional liability.
Betting Exchange is for you who prefer to find better odds instead of bonuses and offers. This is mainly for winning bettors who want to move a larger amount of money without hitting any limit. You won't be getting the convenience like the ones in regular bookies, but it's possible to score bigger winnings from betting exchanges.
An experienced bettor should use both of them, depending on the conditions and strategies. For example, matched betting is a betting strategy that takes advantage of both betting sites and guarantees profit no matter the outcome.
