Betting exchanges are portals that bring people together... they could be described as being a little like ebay, they bring together both buyers (backers) and sellers (layers) to a centel location where trade can take place.

Backing=Betting on an outcome that you think will happen

Laying=Betting on an out come you think will not happen

Punters at betting exchanges have the opportunity to either back or lay events, these events can range from sports to politics. Again like the ebay example these institutions make their money by charging commission.... If you were to place a bet on betfair for example and your selection happens to win, upto 5% of your winnings will be paid to them in commission for using their services. This is how all betting exchanges operate and charge for there services.

The unique thing about the way betting exchanges are that they operate by allowing users to set their own odds on events according to ones personal opinion. Users of betfair offer odds on an event covered, The odds submitted by a particular user need to be accepted by another user with an opposing opinion in order for a bet to take place.

Today there are three major betting exchanges to choose from:

Betdaq

Betfair

I recommend you open an account at betfair because it has an overwhelming share of the betting exchange market, hence it has plenty of liquidity. However the other two do frequently have promotional offers so its worth keeping an eye on what they have to offer. Betdaq recently had a period where new members only had to pay 2% commission for a period rather than the regular 5% at betfair.

When using matched betting we only use betting exchanges to lay bets

an example of laying

…say bob Was of the opinion that Manchester utd wouldn’t win the premiership this year and layed a bet of £10 at odds of 3.0 his liability on the bet would be £20. If Manchester utd did indeed lose bob would make £10 profit however if they happened to win bob would lose £20, your profit on a lay bet will always be the same value as your stake.

How the Lay bet is calculated

(Odds in decimal)-1 * bet stake= liability

Below is a screen shot from betfair you can see that the two different colour columns represent the back and lay options. In the case of matched betting we are only interested in the pink (lay) column. When you use the matched betting calculator this will calculate how much you need to lay at the betting exchange and the amount of money that will be required in your account.

Thats the fundamentals of lay betting covered, all of the betting exchanges have there own tutorials in placing bets, which maybe useful to take a look at before you begin. 

>>matched betting guide