What is the Difference Between a Bookmaker/Sportsbook and a Betting Exchange?

Two Smartphones Being HeldDespite the fact that betting exchanges have been around for almost 20 years, the vast majority of punters still use traditional online betting sites/bookies to place their bets.

If you remain unsure about exchanges you can read more about them in our main guide to betting exchanges but here we focus on the main differences between a bookmaker and a betting exchange.

Placing Bets

Wagering on a betting exchange can seem very different to betting on a sportsbook. Here we outline the main differences, along with some of the pros and cons.

On an Exchange You Can Back and Lay Bets

Betfair Football Match Betting

The main difference between the two methods of wagering is that an exchange allows you to lay bets, whilst you can only back at a normal betting site. To lay a bet is to act as a bookie and take other peoples’ bets on an outcome, effectively betting AGAINST that outcome yourself. For example if you lay Man United you are betting against them, effectively betting on a draw or the other side to win.

Exchanges Can Be Used to Hedge Your Bets

Betfair Exchange Horse Race Betting

Traditionally a betting exchange was the only/easiest way to hedge your bets, either in-play, mid-way through a tournament or before an event had started. However, increasingly many betting sites offer cashout or partial cashout on bets. This facility gives you some of the flexibility of an exchange, although not quite as much, and whilst it is easier to cashout a bet than hedge on an exchange, your returns are usually a little lower at a betting site.

Placing Bets is Simpler with a Bookmaker

BetVictor Upcoming Horse Races

In many ways placing your bets is easier at a betting site because the bookie quotes odds and that is the price you will get. In contrast, at a getting exchange you need liquidity in order to be able to place your bets. This means you need an exchange user prepared to lay the wager you want to place and, particularly on less popular markets, this can sometimes be a problem.

It’s Decimal Odds Only at an Exchange

Betfair Exchange Football Highlights

Most UK betting sites use fractional odds as standard, for example 6/4 or 10/1, whereas betting exchanges use decimal odds – 2.50 or 11 in the examples given. Betting exchanges now allow you to see a fractional approximation of the odds when you hover over the markets but there is greater flexibility at a normal bookie because you can almost always choose between decimal, fractional and American odds.

Better In-Play Betting (if the Liquidity is There)

Betfair Exchange Football Correct Score Betting

Because the odds at a betting exchange are controlled by the market, rather than employees of the bookie, it is easier for an exchange to offer in-play betting. This means you’ll get a wider range of markets on a bigger number of events and whilst the standard betting sites have improved their in-play offering massively, the exchanges – for now – retain the edge…

…if the liquidity is big enough, that is.

Coral In-Play Football Match Betting

And there in lies the big problem with betting exchanges, you need somebody to be willing to take your bet. For in-play betting on smaller matches you may struggle to place a bet at all, especially it it’s on a market that attracts less attention. Which is something that doesn’t matter with a traditional sportsbook.

Odds, Offers & Margins

One of the biggest considerations when deciding to bet with a bookmaker on a sportsbook versus betting on an exchange is where the best value lies. Here we take you through what to look out for.

Exchanges Normally Have Better Odds

Betfair Euro 2020 Betting

Bigger returns and better odds have always been the number one selling point of an exchange and with no middle man – the bookie – taking a cut, odds ARE usually better at an exchange, even allowing for the commission charged. This isn’t always the case though, especially on major events and markets but on bets at long odds, for example correct scores in football, most horses and many long odds golf markets, the exchange usually comes out on top, often by a considerable margin.

Exchanges Rarely Offer Free Bets, Bonuses or Promotions

Reward Slot Wheel

In general you will find that betting sites offer more in the way of regular free bets, offers and bonuses than an exchange does. The business model of a betting exchange does not allow for such promotions, although the success some exchanges enjoy means they are able to compete to some degree.

There are no Limits on an Exchange (Except Liquidity)

Green Speedometer Icon

However, to the liquidity swing, we must also factor in the limit roundabout! Whilst liquidity can be an issue when using a betting exchange, effectively you may find the same issue in a different guise at a bookmaker: wager limits. At a betting exchange, as long as there is cash available on the other side of your wager you can bet as much as you want, even up to millions of pounds on the most popular markets. However, at a bookie you are restricted by maximum bets. The limit varies according to the market, the bet and, most crucially of all, the customer, with successful punters often seeing their accounts limited to very small bets.

Beyond very low limits, a further sanction a bookmaker can use against winning customers, is a ban. A polite email will tell successful customers, or perhaps those targeting markets where the odds are out of line, that their business is no longer welcome. This is perfectly legal and whilst it may seem unfair there is no obligation for a bookie to accept your bets. In contrast a betting exchange will NEVER ban customers (other than for fraud), no matter how big, obscure, or successful their bets are.

Factoring in Commission

5 Percent

At a betting exchange you pay commission, usually only on winning bets but sometimes, at some lesser exchanges, on all wagers. In contrast, at a bookie the commission, or margin, is effectively already built into the odds, meaning your returns are easier to work out as there are no further deductions. As such, for those who are averse to maths and like to keep things very simple, a normal bookmaker may be preferable.

Betting Sites v Betting Exchanges: Which is Better?

Pros and Cons Jigsaw Puzzle

So when all is said and done, which is better – a traditional sportsbook/bookmaker or a betting exchange? As much as this sounds like a cop out, it depends on what you’re looking for:

  • Bookmaker – If you like bonuses, a simple to use site and the ability to place the bet you want regardless of who else is betting on the match, then a standard bookmaker is probably more suited to you. Especially since the introduction of cash out allows you to hedge instantly without needing additional funds to cover the extra liability.
  • Betting Exchange – Those of you who care more about odds than offers should head to an exchange. Especially if you’re a winning bettor and/or want to move large sums of money without the danger of being limited. You may sacrifice a bit of convenience, but in the end you might be able to eek out a slightly larger win.