If you’re reading this, I’m sure you’ll already know what a betting exchange is already. If not, a betting exchange is a peer to peer market place where people can bet against each other on various sports and World events.
Unlike a traditional bookmaker, the exchanges don’t care whether you win or lose. They make their income from a commission based on winning bets. The level of commission varies between exchanges, and some offer discounts and promotional fee free periods.
Due to this particular business model, It’s highly unlikely that you’ll find your account restricted, no matter how much you win. This is one of the key reasons to use the exchanges over the traditional bookmakers. Generally speaking, the exchanges tend to offer better odds, whilst offering a more efficient market place.
So What Are The Options?
Betfair is the most established and pretty much dominates, due to first mover advantage. Their range of betting markets will appeal to the pickiest of punters. The key thing for traders in particular, is the amount of liquidity available to continually back and lay the markets. The merger between Paddy Power and Betfair in February 2016 as a plc makes the business stable and viable for the foreseeable future.
Although I like Betfair, it’s certainly not without its problems. I’m not sure if it’s quite as pronounced now, but the exchange was continually having problems with their live feed. No live data feed, and the markets remain suspended. This can be a real problem when you’ve got just one side of a trade on. It leaves you nervously exposed. It’s always recommended to have an alternative exchange funded too, just for this eventuality.
Betfair is the most supported platform, as the API can be accessed by third party developers. If you’ve used any type of Betfair software, the chances are, that it accesses the exchange data through the API. It’s generally secure, and allows us fast prices remotely.
Winning bets attract a variable commission rate from 2% to 5% depending upon volume and how you configure your own personal account. Again you’ll find the casino and slots offers on the site if that’s what you enjoy.
For the more professional and profitable traders, Betfair introduced a further set of fees called Premium Charge. Every Wednesday these winning customers get charged between 20% to a huge 60% for the privilege of winning with Betfair. Unfortunately, they’ve been getting away with it for too long, but they can. No competition has come close to challenging the liquidity of Betfair, leaving any competition floundering, for now at least. This brings me onto the next option:
Betdaq was the next to arrive on the scene. In fact Betdaq is officially the second largest exchange in the Uk. Established in 2000 and later sold to Ladbrokes Coral in 2013. It is said to process in the region of £75 million in bets each week, which is incredible.
There are a few pieces of trading software that support Betdaq, and in my experience, this exchange seems considerably more stable than Betfair, with far less outages. It’s important for traders that the platform operates flawlessly, as huge amounts of money are processed second by second. Keep the customers happy, and they’ll keep coming back. Betdaq is the powerhouse behind the Ladbrokes exchange, which isn’t widely known.
Winning bets are charged a fixed 2% in commission which is very reasonable. I think that people are seeing Betdaq as more viable for professionals, as there’s no crippling premium charge. There are a few rumours that winning accounts attract an increased commission of up to 10%, but that’s far more attractive that Betfair’s offering.
For as long as Betfair continue to be greedy, I see Betdaq becoming a viable competitor shortly. Watch this space…
Smarkets is the relative newcomer to the betting exchange World. It offers a clear and transparent service and is becoming very popular. The way Smarkets processes multi bets is different to the other exchanges and can sometimes cause a little confusion.
What I do love with Smarkets is there’s no minimum bet, which makes the platform ideal for developing new betting or trading ideas. They have a fixed 2% commision as well as and additional 1% win or lose professional tier. This offers great value, but comes at a price, and that is liquidity again.
The platform itself is less developed, and despite murmurings over the last few years, It remains unsupported by trading software. Due to the partnership agreement with some of the matched betting service providers, a commission free period has been agreed for some matched bettors.
I find the platform a little clunky if I’m honest, and until things improve with their quantity of markets and liquidity, I’ll be keeping the bulk of my trading away.
Which Should I Choose Then?
There isn’t a one size fits all answer, when it comes to choosing an exchange. If you’re a matched bettor or you like to back or lay events individually, then Smarkets is probable the best for you. Its simple design and user experience lends itself nicely to any betting that doesn’t rely on trading. On this point alone, I feel that Smarkets needs to up its game to gain traction.
If you’re a trader, and the markets you wish to bet on rely on liquidity, then either Betdaq or Betfair will do the job for you. Their range of markets to trade our far superior, and the complexities of trading can be eased using appropriate software for charting and lightning fast trade placement.
From a cost perspective alone, I think all the signs are there for Betdaq to become a real contender to Betfair in years to come, as the professional money starts to wane away from Betfair.
If you’re still unsure, you can join all 3 platforms. They all offer a signup bonus, and you can use this to find the match for your trading or betting style.
I’ve not had any problems adding or withdrawing monies from any exchange, and they’re all regulated, should you ever have an issue. Let me know your thoughts by leaving a comment below.