A betting exchange is a platform that allows people to bet against each other rather than betting against a bookmaker. In a traditional bookmaker model, the bookmaker sets the odds and takes bets from customers, with the aim of making a profit by ensuring that the amount of money they take in through bets is greater than the amount they pay out in winnings.
In a betting exchange, the platform acts as an intermediary between the bettors, allowing them to place bets on opposing outcomes of an event. For example, if one person thinks that a particular horse will win a race, they can offer odds for that outcome and other users of the platform can bet against them by accepting those odds. This means that users can both back (i.e. bet for) and lay (i.e. bet against) an outcome.
The key difference between a betting exchange and a traditional bookmaker is that in a betting exchange, users can act as both the bookmaker and the bettor. This means that users can offer odds and take bets, giving them more control over the odds and the ability to lock in a profit before an event has even started.
Betting exchanges typically charge a commission on winnings, which is how they make their money. The commission rates can vary, but are generally lower than the margins charged by traditional bookmakers.
Overall, betting exchanges can offer a greater range of markets, better odds, and more flexibility than traditional bookmakers. However, they can also be more complex to use and require a deeper understanding of how odds and betting markets work.