Betting Exchanges Explained
So you get the idea when it comes to Bookmakers... Betting Exchanges are essentially your opportunity to become the bookie, you can LAY a bet or BACK a bet using the Exchanges. This is massively important as the whole concept behind Matched Betting entails BACKING at the Bookmaker and LAYING at the Exchanges.
We MUST have a Betting Exchange Account in order to take advantage of Matched Betting.
So which one should I choose?
Over the last decade or so we come across a few, including Betfair (the industry leader), Betdaq, WBX and more recently Matchbook and Smarkets.
Our favourite two options are Betfair and Smarkets.
Betfair has always been the 'goliath' of the Betting Exchanges and really pioneered the idea some 17 years ago. However, a number of new challengers including Smarkets are really stamping their presence on the marketplace. This is not by chance, they have really thought through the sites aesthetics, functionality and importantly gained enough members to significantly boost their liquidity on each of the market events.
Having said that Betfair still edges it for us. Yes it has the 5% commission, as opposed to Smarkets 2% but it still has GUARANTEED high liquidity on most markets, plentiful market options and its userface and functionality has always been very intuitive to use. Of course it's up to you which one you use, but we'd recommend Betfair as your primary exchange and Smarkets as your number 2.
Betfair Sign Up - Recommended - Click below to sign-up and claim your FREE BET
Smarkets Sign Up - Ideally recommended but optional at this stage - Click below to sign-up and claim your FREE BET
Betfair Exchange - Key Market Examples
So there are dozens and dozens of sports and events you can technically place a matched bet on. From the favourites of Football and Horse Racing, through to Volleyball and Judo. You can even bet on non sports related events, like I'm a Celebrity or X Factor!
Clearly when matched betting, we want to do the following:
1. Pick a sport/event where there is plenty of liquidity (money available in the betting pot) we'll come back to what liquidity means later
2. Pick a sport/event that doesn't arouse suspicion at the Bookies when placing your BACK bets. Placing lots of bets on the Premiership is normal. Placing lots of bets on Swedish Volleyball and Thai Boxing may be picked up by the Bookies as 'unusual' so its best just to stick to the popular sports/events. It won't matter at the Exchange, but it could matter at the Bookies.
3. Always place round figures when placing the BACK bet at the Bookies, for the same reason as above, it won't arouse suspicion. Again round numbers don't matter at the Exchange.
The Football screenshot above shows the WIN market for Leicester vs Man City. You can bet on Leicester to WIN (5.2) or Leicester to LOSE (5.3)... OR... you can bet on Man City to WIN (1.75) or Man City to LOSE (1.76)... OR... you can bet on the DRAW (4.1) to WIN (to happen) or the Draw (4.2) to NOT WIN (to not happen).
As an example, think of the stock market and how many stocks you can buy or sell shares on, money, gold, companies etc etc... The betting exchanges are no different, essentially you can buy (BACK) or sell (LAY) on the various markets and each market has a number of 'options' so using Footy as our example, the most popular Footy markets to bet on are, WIN MARKET (which includes the WIN/DRAW/LOSE options) HALF TIME / FULL TIME (which team you expect to be WINNING at HALF TIME & FULL TIME), CORRECT SCORE (the exact score at FULL TIME) and ANYTIME GOAL SCORER (which player will score during the match).
You will notice that we have two halves of the betting exchange options, BLUE for BACKING the bet and PINK for LAYING the bet. Remember the BLUE for BACK and PINK for LAY colours, as getting them the wrong way round could cost you a few £!
The three columns are pretty self explanatory. WIN - DRAW - LOSE.
The BLUE boxes always show the best available BACK odds. Like any bet with a Bookie or Betting Exchange, we want the highest available BACK odds to maximise our potential profits.
The PINK boxes are showing the best available LAY odds. The LAY bet is our liability and liability is a KEY word you will become very familiar with over time. We ALWAYS want to place a LAY bet at the lowest possible odds in order to reduce liability and the idea is once again to maximise profits.
Lets just recap that last point, as its crucial to your success, we want to place our BACK bets at the highest available odds and our LAY bets at the lowest available odds.
As this is a basic guide, we are predominantly focusing on Matched Betting, not arbing, trading, dutching, or punting, so we don't need to worry about the other boxes, just the BLUE and PICK columns.
Liquidity vs Liability
A number of our newbies in the past have told us that they get confused between liability and liquidity when learning the Matched Betting ropes. To be honest with all the jargon and MB terminology involved it's not all that surprising...
Check out the screenshot below... We've used a few Football Screenshots from this weekends action. We've chosen to highlight a few important LIQUIDITY lessons (please excuse our freehand highlighting technique!)
The first match, Arsenal VS Stoke, is just about to get underway. You will see that the amount MATCHED in the pot is over £1.7 million! This is in contrast to the Liverpool VS West Ham game (which is still over 24 hours from kick-off) has just £42,454 MATCHED in the pot currently. The lesson here, is that the vast majority of LIQUIDITY becomes available on the day of the event itself. In the example of Premier League Football the LIQUIDITY is rarely an issue, especially when Matched Betting relatively small amounts of money.
Now, as well as the MATCHED amount above, highlighted in yellow, we also need to pay attention to the BACK and LAY LIQUIDITY amounts, shown in the BLUE and PINK boxes. In fact these are more important to you than the overall amount, as they show you what you can actually bet on your chosen event.
The LIQUIDITY is ALWAYS shown as the £ figures below the BACK or LAY odds.
You can see that the amount of £7460 is available to BACK Liverpool and £8874 to LAY Liverpool. These figures are known as the LIQUIDITY.
Lets say we want to place a BACK bet on West Ham at odds of 11.5
We can BACK a figure of UP TO £167 as BACK BET and it will instantly be MATCHED as the money (liquidity) IS AVAILABLE.
For example, place £100 @ odds of 11.5 and the bet would be instantly MATCHED, it would still leave £67 in the pot (at these odds).
Likewise for the LAY bet, should we wish to bet AGAINST West Ham winning, we can place a LAY bet up to £46 at odds of 12.0 and the bet would be instantly MATCHED. If we only LAY £20, it would leave £26 at 12.0 available for someone else to bet.
Safe2bet top tip: Always make sure there is enough liquidity in the pot before placing your LAY BETS. In fact its one of our S2B TEN COMMANDMENTS!
If there isn't enough LIQUIDITY in the pot then not all of your bet will get matched. Unless you're a seasoned MB'er then this can prove tricky to recalculate your odds, especially if you have placed your bets relatively close to the start time of your chosen event. So using the example above, do not place a £200 bet on West Ham at 11.5, as currently there is only £167 available to bet at those odds.
Another reason for using Betfair is the volume of LIQUIDITY. Getting your bets on isn't normally an issue, especially on the more popular events we discussed earlier in the guide.
We are mindful in creating this guide that we should make it as useful/factual/insightful as possible. We are also mindful to not scare people off Matched Betting! Don't be phased by the terminology and the rules and regulations. It really does become 2nd nature by the time you've done it 5,10,20,50,100 times!
Moving swiftly on the LIABILITY:
LIABILITY is how much you are liable to lose if the LAY bet WINS. If you BACK something then your LIABILITY here is just your stake amount, for example £10. However, when you become the LAYER (or the Bookie as it were) you are wanting to WIN the BACKERS stake of £10. In order to have the chance to WIN the BACKERS stake of £10, you need to put up the potential funds to pay them off, should their BACK bet WIN.
For example, if the BACKER bets £10 at 11.0 (10/1) then their potential winning is £100. So you need to have £100 in your Betfair account to cover their BACK bet if it WINS, this £100 is known as YOUR LIABILITY. If the BACK bet DOES WIN then you must pay them £100, if their BACK bet LOSES, your LAY bet WINS and you get to keep their stake of £10.
Lets use another example to make it clearer:
In this example, BOTH OUR STAKE AND OUR LIABILITY is £167 as we are the BACKER. We stand to WIN £1,753.50 in our Betfair Account, if the BACK bet WINS.
In this example, although our STAKE is only £46, our LIABILITY is £506, as we are the LAYER (the BOOKIE). We WIN the BACKERS STAKE of £46 if West Ham do NOT WIN. However, if West Ham DO WIN, we have to pay the BACKERS WINNINGS of £506.
* THIS IS OUR LIABILITY *
Don't be concerned by the large liabilities, when you start out matched betting, you will not be placing large liability bets. Your bets will likely look more like the example below, only after plenty of practice will you be placing much larger bets, which will make you much larger profits of course :-)
As you will see, placing a LAY bet of £25 on the UTD vs Spurs DRAW, would leave you with a liability of just £62.50. Not hundreds, or even thousands of pounds of liability. Not until you feel ready for those kinds of bets, in the weeks/months/years to come!
Always remember folks, in Matched Betting we are BACKING at the BOOKIE and LAYING at the EXCHANGE. So you are never LOSING the LIABILITY figure at the EXCHANGE because what you LOSE at the EXCHANGE, you make the WINNINGS back at the BOOKIE, as we are betting on all necessary eventualities when Matched Betting.
Make sense?! It will when you try some real life examples for yourself. Its much easier to learn by doing than reading. A bit like learning your theory driving test, then learning how to actually drive! Our sign-up offer challenge will shed a lot of light on ALL of this.
* LIQUIDITY = Amount available in the betting pot at the current available odds
** LIABILITY = Amount you stand to lose from your LAY bet
Getting your bets on!
It's a piece of cake placing a BACK bet and a LAY bet on the EXCHANGES. To be honest, as this Safe2bet guide is based around Matched Betting, 99% of your BETS on the EXCHANGE will be LAY bets, as the BACK bets will be placed with the Bookies to take advantage of their free bet offers.
Let's take a quick example of a BACK bet first because it is possible to BACK on the exchanges, although placing BACK bets on this platform will be few and far between:
We'll re-use the screenshots shown above to keep it simple, West Ham BACK odds...
We click on the BLUE BACK box, showing odds of 11.5 at this moment in time.
This will automatically bring up the bet-slip as shown above. This bet-slip summarises the bet, example £167 @ odds of 11.5 = a potential return of £1,753.50.
* Remember this is just an example using the given LIQUIDITY available. Your personal bets will be more like £25 @ odds of 3.0 when you start matched betting for the first time *
Regardless of how much you do bet. ALWAYS double check the figures to make sure they match your expectations. A bit like trusting your Sat Nav, use common sense to double check, if your Sat Nav tries to direct you into a Lake, don't drive into the Lake!
In Matched Betting, if you are BACKING Brazil VS Algeria in the World Cup and when you hit BACK the bet-slip reads 40.0 instead of the 2.0 you roughly expected, then chances are you've probably clicked on Algeria to WIN rather than Brazil!
Once you've confirmed the odds click 'place bet' and hey presto your bet is Matched (so long as there is enough liquidity of course as mentioned before)
Moving on to the LAY bets...
Again we'll re-use the screenshot from earlier. West Ham LAY odds:
In this example, we are going to place a LAY bet on West Ham.
The PINK box shows the odds of 12.0. We are going to bet the available LIQUIDITY of £46. We could choose to LAY ANY figure under that amount, up to £46, so £5, £10, £15.32 (whatever our S2B Matched Betting Calculator tells us to bet).
We click on the PINK button this time (not the BLUE button) and just like the BACK bet, this time our bet-slip will show are LAY bet summary.
The bet-slip basically summarises the bet and that if the BACK bet WINS, then as we need to pay the BACKER their winnings, we need at least £506 in our exchange account (our liability) for this example bet.
If the BACK bet LOSES then our LAY bet WINS and we WIN the BACKERS stake of £46 (less our Betfair 5% commission). So £46 less -£2.30 = a return in our account of £43.70 :-)
Don't forget the COMMANDMENT, 'thou shalt not forget to double check all the bets are correct before clicking 'place bets'.
Every action should have a re-action, so if the action was reading this, the re-action should be to get stuck in and have a go. Exciting times ahead because now you should have read enough to feel more confident to start making some risk-free, tax-free cash from Matched Betting :-)
NEXT UP - QUALIFYING BET STRATEGY
