Exchanges - Betting Evolution.
In the golden era of the betting shop there used to be a marked separation between bookmakers and punters.
Since June 2000 with the introduction of the first fully fledged
open market, peer to peer internet betting exchanges, the traditional
betting boundaries have been redrawn.
Essentially, horse racing and sports event betting punters can now act like and essentially be the bookmaker.
Using arbitrage, trading, dutching and bookmaking strategies and techniques
there is a revolution taking place in the world of betting
systems and strategies.
Betting Exchange trading and betting represents an exciting innovative
but still risky venture that is gaining credence and popularity amongst
horse racing punters.
Throughout Europe, Australia and in over 100 other countries horse
racing fans who are willing to take a leap, transfer their skills and
take advantage of the betting exchange platforms Betting Exchanges are
reporting huge improvements in their account balance.
The UK horse race gambling market was altered forever in May
2000 with the introduction of the first peer to peer internet
Betting exchanges basically represent peer to peer, or person to person betting.
The betting is conducted completely through the internet and takes
advantage of the revolution in high speed broadband internet
technology, and highly powerful personal computer systems, Satellite
Information Sports services (SIS) and super fast digital feeds.
The battle lines have since been completely redrawn with the big 3
UK bookmakers having to face up to the commercial challenges of this changing environment overnight.
The massive cultural change represented an immediate threat to what was
essentially a monopoly stranglehold over the UK betting industry.
With traditional bookmaking the odds are set initially by the bookmaker
who imposes his own opinion on the outcome or presumed outcome of a
horse race based on past historical data and results.
The bookmaker then obviously factors in his cut, his profit margin, and
so has a direct financial interest in the result of any given horse
race or sporting event that he has priced and taken bets.
On the Betting Exchanges in contrast the odds are created totally by the punters themselves.
It is the players themselves on the betting exchanges who can choose to
bet on an outcome of a horse race or other sporting event, back to win,
or bet against an outcome, lay to lose, any horse race or other
With the Betting Exchanges the exchange operators profits simply come
from a commission of around 5% when a punter wins ie the exchange takes
5% tax on any net winnings.
The betting exchanges have gone from strength to strength since 2000
and are expected to continue to do so, growing exponentially as they
are year on year.
There has been some bad blood and publicity as you would expect with
any such massive cultural change by no means suiting all parties.
Most importantly governing bodies and politicians have been convinced and impressed
by the Betting Exchanges commitment to maintaining sporting integrity.
In the US the Betting Exchanges are positioning themselves should there
be a change of direction in US gambling regulations which could allow
betting exchanges to enter the flagging U.S. horse racing market.
This would be a truly lucrative move for the Betting Exchanges with the
potential for as much as a 6 fold increase in trade in the massive US
horse racing industry.
Pity the Poor Bookmaker.
In the early days the traditional bookmakers argued that as they are
forced to pay for a license to make books on horse races, surely that
meant that every punter who lays a bet on the betting exchanges should
also be made to pay for a bookmaking license.
Obviously if such a model was passed it would inhibit and possibly
prohibit account holders from using the betting exchanges, no money in
the lay column means no bets matched in the back column!!
Fortunately the motion never received any support and the bookmakers had to accept their fate.
Personally i feel that the concept of layers requiring a license is absurd.
In essence all stock market day trading allows bets on rising (bull) or
falling (bear) markets. Why on earth should betting either side, back
or lay, on steaming or drifting sporting outcomes be any different?
The argument for charging layers a bookmakers licence was utter nonsense and just stank of bad grapes.
One of my favourite strategies incorporate the concept and power of
multi horse betting otherwise known as Dutching.
Dutching has of course always been available even at traditional
betting shops and allows a punter to back multiple horses in any single
When taken to the extreme of betting every horse in a race to win
except the one you think will lose then this is exactly the same
scenario as laying any 1 horse to lose on the betting exchanges.
For example backing 3 horses to win in a 4 horse race is no different to laying the 4th horse to lose.
In fact Dutching on the exchanges is a better method than laying for getting the best value.
The betting exchange model simply allows us to lay horses quickly by
doing all of the complicated math for us and presenting a single lay to
The bookmakers were simply frustrated that the betting exchanges have
taken such a big chunk of their market share and are desperately trying
to find any possible loophole that they can use to regain any sort of
Unfortunately the tide has turned and the environment has changed.
The bookmakers had to adapt or die and naturally they adapted to
continue making profits and offering better value bets than they did
They have even taken to the exchanges themselves using their
professional bookmaking skills immediately pre race to hedge off huge
liabilities and guarantee their own profit margins.
Essentially the Betting Exchange acts as the middleman between 2
players with opposing views about the same sporting event.
the Betting Exchange ensures that all players accounts are credited
with enough money to cover the bets and liabilities to which they are
exposed should they lose a bet.
At the point of losing they will become immediately responsible to the
punters who placed winning bets ie those who took the opposing view
about an event.
Once the results of an event are published, the bet is complete.
The betting exchange then transfers the liability from the losing
punters accounts to the winning punters accounts.
One of the main advantages of the betting exchanges is the option to
set your own price, known as “asking for a price”.
If your personal analysis of a horses chances in a race is different to
that currently on offer you can ask for a better back or lay price than
is currently available.
For example if a horse is shown at 5 digital (4/1 fractions) then you
can ask for a better price of 6 digital (5/1 fractions) and also at the
stake that you request.
If a layer decides to accept your stake at the price you request then
your back will be matched. If not it will remain unmatched and you can
withdraw it before the race begins.
Obviously asking for unbelievable odds at silly stakes will leave your bet unmatched in the market.
Another key innovation delivered by the betting exchanges was the
introduction of “in play” betting which allows punters to bet once the
race has actually begun.
In play markets operate exactly the same as pre race markets except
once the race begins all pre race bets are cancelled and a new market
This provides yet another advantage in that you can place an order into
the big ante-post markets days before an event with the knowledge that
it will be cancelled the moment the race goes inplay.
For immediate pre race punters – traders who concentrate on the furore
of betting action in the 15 minute pre race peroid, there is an option
to carry over bets into the inplay market using professional betting
software like Bet Angel Professional.
At the end of the race betting is suspended and all unmatched bets are cancelled.
If there is a Stewards inquiry announced a 3rd betting market is
usually opened as a new market for the horses directly involved in the
Value Betting and the Betting Exchanges.
For a long time punters complained that bookmakers would never stick to
their early ante-post prices, or would only allow limited bets at those
The competition from the betting exchanges has opened up the early, ante-post betting markets.
Betting exchanges increase the window of opportunity to gain best
prices right up to the start of the race. Punters no longer have to bet
on course or get on early with the bookmakers to get the best value.
Savvy punters can make their decisions early in the day where they spot a value bet and ask for a price.
Following the betting exchange markets during the day a punter can get
on any time or incorporate automatic betting software and bet at times
convenient to them.
All these advantages and innovations were never available before the
betting exchanges and these are all advances that shifted the balance
of power further away from the traditional bookmakers.
Similarly the betting exchanges have tapped into the spread betting
arena offering variations on spread betting themes with concepts like
line range betting.
Options might include aggregate winning distances at a race meeting or other advanced bets.
Betting Exchanges. The Advantages.
To some degree betting exchanges developed as an antidote to the
frustration that everyday punters experienced during betting with
Often, the positions taken by bookmakers were aimed at preventing
punters from gaining an advantage and to protect the bookmakers
margins. Basic commercial business sense to be fair.
Exchanges were developed to allow punters to bet against other punters
based on their opinions knowledge and expertise of their chosen
Value and the Traditional Bookmaker.
The problem with bookmakers is that they factor in an over-round of
around 20% on each race in order to make their profit guaranteed.
The odds were manufactured by professional odds compilers to achieve this end.
In one fell swoop the arrival of the betting exchanges altered the playing field.
Today, the average over-round on any horse race betting market on the betting exchange is between 101 and 102% .
A punter does not need to be an expert to spot the potential for value bets on the betting exchanges.
Before getting too carried away you must factor in the betting exchange
5% commission on winnings and remember that betting tax was abolished
in the shops in 2001.
One can expect between 10 and 20% better value on any given starting
price when comparing a betting exchange market and a betting shop
However the bookmakers have reacted surprisingly well to offer better
value and still seem to be doing rather well on the reduced margins.
It does beg the question how much money were they making before the betting exchanges arrived!
Opposing Weak Favourites.
A very popular style of betting and one of the main attractions of the
betting exchanges for new punters is the ability to identify and
lay/oppose a weak favourite.
For example you will all have watched large handicap races with 3 or 4
challengers all of equal stature and asked - who can really effectively
pick and price the winner?
So effectively all punters can now act as bookmakers and bet any horse in any race to lose.
The option to find the winner is of course still there and if a punter
can find both then they will make even more profit.
But, the difficult and complicated task of only being able to select
winners in order to make a profit is now no longer the critical element
of horse racing betting.
At Betting-Exchange-Trading i focus advice, tips and discussion towards:
How to spot value
How to identify races
Where value can be found
What is race specialization
How to create betting systems and strategies
Learn the techniques needed to take advantage of value
The essential skill of how to price up a race
a price that you believe is viable for a given horse in a given race
and posting that price into the market to be matched is part of the
attraction of the Betting Exchange.
advantage is the concept of trading between internet accounts and the
exchanges – betting arbitrage – the ability to lay a horse on the
Betting Exchange and back it using a separate account with a different
bookmaker to create a no lose situation before the race has even
Similarly, back/ lay betting arbitrage, referred to as Betting Exchange
trading or scalping, where the concept of trading short term price
movements using back and lay bets to lock in pre race profits is a
powerful profitable strategy.
Here at Betting-Exchange-Trading we cover the essential betting
software and the concepts of charting, scalping, swing and momentum
trading all vital ingredients for successful Betting Exchange trading.
Through the betting exchanges the concept of horse racing betting as an investment tool finally became a reality.
Trading and arbitrage betting are still betting and gambling in the
same way that betting on financial markets is repackaged as
“investment” until half your investment disappears in global financial
Betting Exchange trading offers a calculable % chance of success based
on historical data and experience and it is perfectly valid to phrase
this as “investment”.
Betting Exchanges. The Disadvantages.
Reading the media hype surrounding the betting exchanges, you might
begin to believe that must be might be impossible to lose, there is no
negative side to exchange betting, a true nirvana for all betting
punters has arrived.
Obviously any form of betting carries inherent financial risk.
It is estimated that between 10 and 15% of Betting Exchange accounts have moved into the red
with around 3% make a living on the Betting Exchanges when classified as £15k+ (tax free).
Who are the Winners?
Betting exchange punters whose accounts are in profit are still usually
those with professional inside knowledge, a high level of expertise in
back to win or lay to lose betting.
Those prepared to specialize and become experts in their chosen field of racing are usually the most successful.
In essence, all the same assets that professional horse racing punters
have always required are still essential to some extent to be
profitable on the Betting Exchanges.
horses drift or steam on the day of a race you still have to ask
questions and find where the price movement is coming from.
Similarly, while betting tax was abolished in betting shops in 2001,
the exchange model obviously required that the exchange betting company
gets its profits from somewhere.
The commission of 5% on net winnings has the same effect on punters
winnings as the betting shop tax that had just been abolished.
So although odds are between 10 and 20 % higher on the exchanges the 5%
commission on net winnings must then be factored into any concept of
value by the betting exchange promoters and enthusiasts.
Betting Exchanges and User Error.
All new punters to the the Betting Exchanges platforms will have to get
used to the new style, the new concepts and the new technology.
Online internet betting is not natural for everybody.
Some horse racing enthusiasts simply cannot and never will be able to
transfer their age old, hard won betting skills to the high tech world
of online betting technology.
But it is surprising how quickly technophobes overcome their fears once
cold hard cash enters the betting equation.
All punters will make horrendous mistakes in their early ventures onto the betting exchange platforms.
Odds and stakes can be mistyped, the concept of back one side, and lay the other takes some getting used to etc.
Caution and minimum stake betting are the keys to disaster avoidance
and recovery for all new users early betting on the betting exchanges.
In Running Betting. Brilliant but Poisonous.
I demonstrate in running betting in some of my key betting strategies.
It is a powerful tool if used correctly. It can be exciting and extremely profitable.
But it is also extremely risky.
I always advise punters to forget about races less than 1 mile for in running purposes.
The action is simply too quick to analyze, and particularly hopeless if
working without Satellite Information Services (SIS) or super fast
Basically whoever has the fastest live pictures have a huge advantage in running punting less than 1 mile.
There is large variations in performance between the different providers of live horse racing feeds.
SIS, AtTheRacesTV.com, terrestrial TV, C4 all provide pictures within a
few seconds of each other but these few seconds can be enough to be
able to grab a profitable position or falter into a failing one.
Interestingly terrestrial TV pictures were slightly faster than the
digital ones, but obvsiously terrestrial TV is history in the UK.
To bet effectively in running one has to understand the price one is taking and the event that it is in.
Life on the exchanges is not about beating the bookmaker anymore. It is
about beating the other punters on the system.
There is also an element of poker like trickery that has developed
around getting other weaker punters, or new punters who are liable to
make mistakes and tricking them into accepting bad value bets.
All perfectly legal in the exciting new world of exchange betting.