What is a Bet Exchange Site?

A bet exchange sites (also called p2p gambling sites) have become possible since the introduction of the internet. Bet exchange sites act as a broker between parties of bettors. The concept of a bet exchange is similar to that of stock and currency exchange, but the commodity being traded at a bet exchange is a bet. Betting at stock exchange is usually done in the fixed odds format, where odds are fair and a commission is charged from the winnings.

History:

The first bet exchange appeared on the internet in May 2000 at a UK based website called Flutter.com. Soon after that, in June 2000, another large UK based website called Betfair was launched. Since then these two sites were the industry leaders and competed hardly with each other. Betfair was first to introduce a pure exchange model that has been adopted and even improved by Flutter.com. Flutter managed to climb to a 30% market share when a merger with Betfair left the letter the dominant partner by a ration of 84:16. Flutter customers were transferred to Betfair system, while Betfair adopted some Flutter features. The resulting alliance became the largest bet exchange ever. Today, it covers 90% of global marked, after in late 2004 Betfair absorbed the customers of Sporting Option, offering a rescue package to the company that had gone into debts over £5 million.

Preferences:

Bettors prefer using services of large bet exchange sites because they can be sure that their bet will always be paired with a corresponding contradictory bet. They also find bet exchange more favorable because, unlike bookmakers who often apply various restrictions (especially for bettors who win too much), bet exchange sites allow bets of unlimited size. Besides, the commissions charged by an internet companies are lower than those of land-based ones because of lower expenses.

BetFair

Betfair, certainly is the largest company, which guarantees the highest probability of finding a counterbet for every bet placed. To compete with Betfair, smaller companies must offer better conditions. Therefore most of these companies charge a smaller commission. While Betfair takes 5% from winning bets, Betdaq charges 3% and BackandLay only 1% commission.

What Happened to Bookies?

After the appearance of bet exchange sites, land-based bookmakers suffered a serious decline, which provoked a lot of indignation from their part. The feature of bet exchange sites most criticized by land-base bookmakers is an option to lay outcomes, which means to bet that a certain contestant will not win the competition. According to such large bookmaker firms as Coral, Ladbrokes and William Hill, an option to lay a participant offered by betting exchange sites supports corruption in sports, because it is much easier to provoke a loss than a winning. Bet exchange sites, at their part, claim that corruption in sports always was possible, and bet exchange sites cooperate with numerous government bodies to fight against it. In the summer 2004, for example, Betfair provided data to London City Police that lead to 16 arrests related to race fixing, with champion jockey Kieren Fallon among the arrested ones.