To understand the Betfair Exchange and how the odds work, it’s first best to have an understanding of the difference between a betting exchange and a sportsbook.
Fortunately, Betfair has both, and you can seamlessly switch from one to the other using the one login.
The sportsbook is what we would describe as a conventional bookmaker. Here you bet against the bookmaker on events using the odds set by the bookmakers. If you win, the bookmaker pays you out. If you lose, the bookmaker keeps your money.
On a betting exchange, you are not betting against a bookmaker, you are betting against other players (bettors). This is also known as peer-to-peer betting.
In the case of the Betfair Exchange, Betfair simply provides a platform for bettors to bet against each other. If you like, you could say Betfair just polices the platform, to make sure we all do things properly.
In general, the odds on a betting exchange are very similar to that of a bookmaker. The betting exchange odds are usually slightly better though.
The main difference between a sportsbook and an exchange, is when you win at a bookmaker, the bookmaker pays you out. While when you win on an exchange, fellow bettors who have lost pay you out – not the exchange.
The exchange does hold the money from the losing accounts, ensuring winning bettors get paid.
You can only bet on an exchange with funds in your account. You can’t owe someone money, or be owed money either. It’s important to understand that before you get started.
In order for the exchange to work and function, players need to be staking money. If there is no money, there is no betting market.
This isn’t a problem for a live TV Premier League Match on a Sunday afternoon, there will be plenty of money staked on that. But it may be an issue for a League Two match at 3pm on a Saturday afternoon.
If no money is available on a match or an event, you can’t get a bet matched on it.
The Difference between Back Odds and Lay Odds on a Betting Exchange
In order for a betting exchange to work, it needs both backers and layers. Every back bet that is placed, needs money to match (oppose) it. While every lay bet placed, needs money opposing it, to place the back bet.
In the screenshot below the odds on the left in the blue shade are the back odds, while the odds on the right in the pink shade are the lay odds.
As you can see, the lay odds are slightly higher than the back odds. This is always the case.
The odds are in the big figure digits. So if you are looking to back Southampton, the odds are 2.48, West Ham is 3.20, the draw is 3.50.
While beneath the odds, is the amount of money available to be matched at those odds.
In the case of Southampton, there is £25.00 available to bet on Southampton to win at 2.48.While for West Ham, there is £344.00 available at odds of 3.20. For the draw, there is over £11,000 available at 3.50.
What Is A Back Bet?
A back bet is a bet you place on a team or person to win an event or competition, like you do with a bookmaker.
For example, if I think West Ham will win the above match, I place a Back Bet on them on the exchange at 3.20.
What is a Lay Bet?
If I think West Ham won’t win (draw or lose) the above match, I place a Lay Bet on them on the exchange, at 3.25.
The Lay Bet is another fundamental difference between a sportsbook and an exchange.
There is no option to Lay at a sportsbook.
Laying a bet is essentially taking a bet, like a bookmaker does. So when you Lay a bet on Betfair, you are basically acting like a bookmaker.
Why Do Betfair Odds Change?
Betfair Exchange odds behave in a similar way to bookmakers’ odds, in that they go up and down.
If everyone is betting on Manchester City to beat Leeds United on Saturday, the odds on Man City to beat Leeds shorten with the bookmaker.
The same thing happens on a betting exchange.
The difference is the bookmakers change the odds on a sportsbook, while on a betting exchange, the betting market shifts the odds with the sheer weight of cash moving the market.
This is essentially no different to a bookmaker. As the bookies change their odds depending on the amount of money coming in on a particular team or outcome.
The cause of the odds changing is basically the same, the weight of cash. The difference is simply the mechanism used to execute the change.
How Do Odds Change On Betfair?
We’ve explained why odds change on Betfair, now let’s look at why and how the odds change on Betfair.
Take a look at the below screenshot……
You can see that there is £772.00 available for a back bet on Betfair, at odds of 2.48.
If someone comes along and places a back bet of £772.00 on Southampton at 2.48, all that money at those odds disappears, and the odds of 2.46 moves into the shaded blue area, where the 2.48 previously sat.
Then if the £1553.00 available at odds of 2.46 gets taken, the next odds of 2.44 would move into the blue shaded area. And so on it goes.
If the money at those odds keeps disappearing, the odds shorten.
The same works in reverse for laying a bet. If I place a lay bet of £89.00 on Southampton at 2.52, all the money at those odds would be matched, and the £1394.00 at the odds of 2.54 would move across into the pink shaded box.
And if bettors keep on placing lay bets on Southampton, those odds would keep getting higher and higher.
Why Can I Change The Odds on Betfair?
So, why can you change the odds on Betfair? The short answer is you can only change the odds on the Betfair Betting Exchange, not the sportsbook.
The reason is simply because it’s a betting exchange, and on the Betfair Betting Exchange you have the freedom to change your odds, yourself.
The downside to being able to change the odds, is that you might not get your bet matched. You can ask for odds, but unless the market moves in that direction, your bet won’t get matched.
In the above example, I could place a back bet on Southampton at odds of 2.48 for £46.00 – using the amount of money that is already available. But I want to place a bet of £50.00 on Southampton at 2.50, so I’ve changed and set my own odds.
The risk there is of my bet not getting matched. The money at 2.48 is already there, but it isn’t there at odds of 2.50.
My back bet – once I place it, would be available for someone to lay, in the lay column at 2.50. If it gets matched, great. If it doesn’t, I either miss out, or I alter my bet down to the odds of 2.48, and accept what is already on offer.