Why Are The Betting Exchanges So Prosperous?
At a time when some areas of the online gambling community are suffering for obvious reasons, i.e. the US situation, it seems that life has never been better for the betting exchanges but why?
You need to understand how the betting exchanges work before you can fully appreciate their business model, and the fact that they can adapt to any situation. In essence, the betting exchanges pit “punter” against “punter” with no liability what so ever for the betting exchange operator. The betting exchange operators take a cut of the winnings from all bets, and while these can vary from a few pence to hundreds of pounds they also have massive volumes of bets.
Why only take from the winners?
The fact that the exchanges only charge a “commission” to winning bets is quite clever, because they take a fee from the winner, leaving the loser with a little more money to bet again. For each bet to be placed there needs to be someone to lay the bet, and vice versa, so the exchange take a fee of every single position taken.
How can they adapt so quickly?
As there is no liability taken by the exchange, they can simply introduce a new event any time of the day or night, and their customers will find a level for each possible bet. As long as the event has some level of popularity, there will soon be enough people laying and placing bets to find the natural “real odds”. This is done without the intervention of the exchange - simple!
As a consequence of the way they work they can open a “book” on any event whether it be cycling, F1, politics, the weather tomorrow or whether England will play in a red or white football strip! Whatever market they introduce there will be sufficient clients to create a liquid market.
The betting exchanges have taken substantial business from the traditional bookmakers and the two sides of the gambling industry are always at loggerheads. Unfortunately for the traditional bookmaker, where “punters” see nobody influencing markets or claiming tax from every stake, they will be attracted. How can the traditional bookmakers fight back?