Years ago betting used to be an activity restricted to the high street. The Internet then changed the dynamics of the industry by allowing punters to bet from the comfort of their own armchairs. As bookmakers began to adapt to the online revolution along came the betting exchanges.
Betfair singlehandedly turned the gambling industry upside down.
As with all great success stories, the idea behind Betfair is incredibly simple: allow the customer to play the role of the bookmaker.
Betting in its most traditional form occurs between a customer and a bookmaker. The customer ‘backs’ an outcome and the bookmaker ‘lays’ it. In laying the bet the bookmaker is betting against the customer. It is betting that their predicted outcome will not occur and offering odds that reflect this.
With the introduction of a betting exchange, for the first time the punter was offered the opportunity to either back OR lay a bet.
The bookmaker wasn’t needed anymore. Betting could be completely peer-to-peer and high rollers who would struggle to find a bookmaker prepared to take their large bet sizes finally had a solution to turn to in a service that allowed them to stake what they wanted.
The betting exchanges profit from taking a cut from the winnings of each bet. A modest looking 3-5% commission for providing the betting platform might not seem a lot – but millions of pounds of bets are being settled every hour. It doesn’t take a genius to see that betting exchanges are well-oiled money making machines. Fortunately, so are some of their customers!
Through betting intelligently there is A LOT of money to be made on the betting exchanges.
Bookmakers face a persistent struggle to now stay one step ahead of the betting exchanges. If they let their odds drop out of line then many are quick to capitalise. Whilst a stockbroker might buy and sell shares, a sports trader backs and lays odds. The same principles apply and the same financial rewards are achievable.
Intrigued? I thought so. So without further ado let me introduce a phrase that I’m sure you will learn to love: arbitrage betting.