The original concept of a betting exchange was that is should be a person-to-person medium where people could exchange odds with each other rather than a bookmaker. By doing this people could get better prices and guaranteed bets.

In traditional betting markets you would need to place a bet with a bookmaker, this bookmaker would happily take your bet, as long as he could take bets from other people also and balance his book to ensure that he made a profit whatever happened. Thanks to a quirk in the law in the UK, the 1844 gaming act to be precise, for a long period of time bookmakers actually had no legal obligation to pay out on gambling debts. Your contract was one of honour. That was fine, but less honourable bookmakers often squared their books by excluding profitable punters or refusing to pay out their debts. You can instantly see the appeal of a betting exchange and why the idea caught on. Betting exchanges wanted you to lodge your funds upfront and honour all debts; therefore a steady stream of business began to flow to the exchanges. The more money that flowed the better the pricing and the more people arrived on the exchanges doorstep. This initial concept of matching bets between two parties and depositing money upfront spawned a revolution and one that has and continues to transform the gambling industry in the UK and no doubt, before long, the world! 

To most traditional bettors, betting exchanges are great because they can get better prices than those at a traditional bookmaker. Also their stakes are not limited, often an issue with some traditional bookmakers if you have consistent success. However, there is much more than this.  The key is how the exchanges work.

Betting exchanges role in the world of gambling is simple. Their role is to get together people who want to back or lay an event. Lots of backer and layer’s come together on the exchange to place a bet and get their bets matched at the best available price. Backers are people who want to bet on an event happening and layers are betting on an event not happening. Money from both sides is placed up front with the exchange to ensure all bets are honoured and winnings are returned shortly after the event closes. No bookmaker makes the odds, it’s just the pure demand and supply of people wanting to get their bets matched.