A betting exchange is a site where punters bet against each other instead of against a bookmaker. You can back a selection to win or lay it to lose, and the exchange takes a commission from your net winnings on each market. The UK exchanges are Betfair, Smarkets and Matchbook. Betfair has by far the most money waiting in its markets.
What is a betting exchange?
A bookmaker sets its own prices and takes your bet itself. A betting exchange doesn't set prices or take a side. It matches people who want to back an outcome with people who want to lay it, holds both stakes and pays the winner.
Because punters set the prices, exchange odds are often bigger than a bookmaker's on the same selection. The exchange makes its money from commission on winnings instead of building a margin into the odds.
How exchange betting works: back, lay and liability
Backing on an exchange works like a normal bet: you win if the selection wins. Laying means betting that it won't win. You take the bookmaker's role, so if the selection wins you pay the backer's winnings.
- Back £10 at 4.0 and you win £30 if it wins, or lose £10.
- Lay £10 at 4.0 and you win £10 if it loses, or pay £30 if it wins. That £30 is your liability, and the exchange holds it from your balance until the bet settles.
Every bet needs someone on the other side. If nobody wants your price, your bet sits unmatched until someone takes it or you cancel it. You can also take the best price already on offer, which matches straight away.
Work out the liability on any lay with the lay bet calculator.Lay bet calculator →Betfair, Smarkets and Matchbook compared
All three are UK betting exchanges with back and lay markets on racing, football and most big sports. The main differences are how much money is in each market and the commission you pay.
| Exchange | Standard commission | Notes |
|---|---|---|
| Betfair | 5% of net winnings for UK customers | The most money in its markets. Discounts on the rate are available |
| Smarkets | 2% of net winnings | Less money than Betfair in most markets |
| Matchbook | 2% of net winnings | Commission-free promotions at times |
Commission rates change. Check the current rate on each exchange before you rely on it.
Betfair's bigger markets matter most for big stakes and fast trading, where you need someone ready to take your bet at the price you want. For small matched bets, a lower commission rate often matters more.
How exchange commission works, with examples
Exchanges take commission from your net winnings on each market, not from every bet. If you win £10 on one bet and lose £4 on another in the same race, you pay commission on £6. If you lose overall on a market, you pay nothing.
| Commission | Liability | You keep |
|---|---|---|
| 0% | £30.00 | £10.00 |
| 2% | £30.00 | £9.80 |
| 5% | £30.00 | £9.50 |
Commission also changes how much of a free bet you keep in matched betting, because the lay winnings are taxed.
| Commission | Lay stake | You keep |
|---|---|---|
| 0% | £7.69 | £7.69 |
| 2% | £7.72 | £7.57 |
| 5% | £7.77 | £7.38 |
When an exchange beats a bookmaker
- Bigger prices. With no margin built into the odds, exchange prices on busy markets are often higher than a bookmaker's, even after commission.
- Laying. Only an exchange lets you bet against a selection, which matched betting and trading both depend on.
- Trading. You can back and lay the same selection as the price moves and lock in a profit before the event ends.
- Fewer limits on winners. Exchanges don't restrict accounts the way bookmakers do, though Betfair charges an extra fee to a small number of its most profitable customers.
Bookmakers still win on sign up offers, free bets, enhanced place terms and best odds guaranteed. Matched betting uses both: the offer at the bookmaker and the lay at the exchange.
Exchange trading: backing and laying the same selection
Exchange trading means backing at one price and laying at another, so you profit from the price moving rather than from the result. Back at 4.0, lay at 2.5 once the price shortens, and you can green up for the same profit whatever happens. Read our Betfair trading guide for back to lay, lay the draw and scalping.
Most traders use trading software for speed. Our guide to the best Betfair trading software compares Bet Angel, Geeks Toy and the alternatives.
Calculators for exchange betting:Lay bet calculatorHedging calculatorMatched betting calculatorFree bet calculator
Downsides of betting exchanges
- Small markets can have little money waiting, so your bet may only part match or not match at all.
- Laying needs the full liability in your account. Laying a big price ties up a lot of money.
- Commission comes off every winning market, which eats into small edges.
- Prices move fast in-play, and in-play bets are matched after a short delay.
Questions people ask
What is a betting exchange?
A betting exchange is a site where punters bet against each other. You can back a selection to win or lay it to lose, and the exchange charges commission on your net winnings instead of setting the odds.
How do betting exchanges make money?
From commission on winnings. On each market, the exchange takes a percentage of your net profit. If you lose on a market, you pay no commission.
Which is the best betting exchange in the UK?
Betfair has the most money in its markets, which matters for big stakes and trading. Smarkets and Matchbook charge lower commission, which matters for small matched bets. Many people use more than one.
What commission does Smarkets charge?
2% of net winnings. Check the current rate on Smarkets before you rely on it.
What commission does Matchbook charge?
2% of net winnings, with commission-free promotions at times. Check the current rate on Matchbook.
Do betting exchanges restrict winning accounts?
Not the way bookmakers do, because the exchange doesn't take the other side of your bet. Betfair does charge an extra fee to a small number of its most profitable customers.