Betting Exchange vs. 

Betting Shop Bookmakers.

The Evolution of Horse Racing Betting.


Betting 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 website.

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.

Bookmaking History.

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 sporting event.

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 race.

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 lose price.

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 commercial advantage.

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 before. 

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 is begun.

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 photo.

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 prices. 

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 traditional bookmakers.

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 sporting events.

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 market.

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

Selecting 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.

Another 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 started.

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 disaster.

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.

If 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 digital feeds. 

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,, 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.


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