Backing, laying, commission, liquidity and the account restrictions nobody mentions in the adverts. A plain-English guide to the two ways of getting a bet on.
For most of betting’s history there was one way to have a bet: find someone willing to lay it, usually a bookmaker, and take their price. Exchanges changed that. Since the early 2000s, punters have been able to bet against each other, with the exchange simply matching the two sides and taking a cut. Both models are still going strong, they suit different jobs, and understanding the difference is worth real money.
A bookmaker sets the prices and takes the other side of every bet. Their profit comes from the overround: the prices on all outcomes add up to more than 100%, so if money arrives in roughly the proportions they expect, they win whatever happens. When it does not, they move the prices to rebalance the book, or accept a position and hope.
The advantages are convenience and choice. Bookmakers offer thousands of markets, from match odds to obscure specials, they take bets on everything from a few pence upwards, and their apps are slick. Prices are guaranteed at the moment you bet, and best-odds-guaranteed promotions on racing mean you often get paid at the starting price if it is bigger. The disadvantages are the margin, which on lesser markets can be brutal, and the fact that the bookmaker chooses whom to do business with. Consistent winners find their stakes restricted or accounts closed; it is the open secret of the industry and the single biggest complaint in our Bookmakers, Offers & Exchanges forum.
On an exchange you are betting against other members. Every market has two sides. Backing is the familiar bet: you win if the outcome happens. Laying is the bookmaker’s side: you win if it does not. If you lay a team at 3.00 for £10, you collect £10 if they fail to win and pay out £20 (the backer’s profit) if they do. Your liability, the amount you can lose, is what the exchange holds from your balance while the bet is open.
You can take an existing price or ask for a better one and wait to see if anyone matches it; unmatched money can be cancelled at any time before the off. The exchange makes its money by charging commission on net winnings in each market, typically 2–5%, rather than by building a margin into the odds. Because the prices come from thousands of competing participants, they are usually the sharpest available anywhere and are widely treated as the truest estimate of an outcome’s chance.
On big, liquid markets – Premier League match odds, major race meetings, Grand Slam tennis – the exchange price minus commission is very often the best price on the planet, and it is worth the small effort of comparing. On small markets the answer flips: with little money in the market, exchange prices are thin and volatile, and a bookmaker’s guaranteed price may be better and simpler. As a rule, the more popular the event, the more the exchange wins.
One subtlety: commission applies to net winnings per market, so a losing bet on an exchange costs exactly your stake while a winning bet returns slightly less than the displayed price. A back at 3.00 with 5% commission is really about 2.90. Always work out the net figure before deciding an exchange price is bigger.
Most experienced punters keep both. They check the exchange first on any liquid market, because it tells them what a fair price is. They then bet with whoever is biggest after commission, take bookmaker boosts and BOG where they apply, and use the exchange when they want to lay, trade or bet in-running. And they keep an eye on their bookmaker accounts, because once a few of them go, the exchange is the only shop still open.
Please gamble responsibly and only stake what you can afford to lose. See our Responsible Gambling page.
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