Blog     13 Jun 2017   5,791

Betting Exchange Sites - How Do They Work?

Each Betting Exchanged Explained

In this guide, we understand more about betting exchanges along with the pros and cons for each one and how to best use each exchange when making money online with Profit Squirrel.

The following video will help provide a quick overview, please read below for more information.

What is a Betting Exchange?

A betting exchange is a marketplace for customers to place bets on the outcome of an event(s). Betting exchanges offer a similar service to bookmakers but with a few differences:

1. You can buy and sell the outcome of an event,
2. You can trade in real-time throughout an event
3. You can trade out to cut your losses or lock in profit.

Betting exchanges generate revenue by charging a small commission fee whereas bookmakers generate billions in revenue by offering less efficient odds. Furthermore, bookmakers also provide customers with offers and promotions worth millions of pounds each week.

Related article: Make Money Online With Profit Squirrel OR check out some bite-sized info on matched betting here.

The Main Betting Exchanges


The world’s largest betting exchange and the largest online betting company in the UK.

Betfair is a great exchange to start with as it’s very popular and there’s usually enough liquidity in the marketplace your lay bet.

Betfair’s lay commission begins at 5% and also offer a reward scheme which will lower the commission you pay over time. To understand more about the reward scheme, Click here


A great alternative to Betfair as you’re only charged 2% commission which is great for maximising your profits. However, Smarkets usually have less liquidity compared to Betfair and fewer markets to participate in. 
This exchange is perfectly fine for football events across Europe and Horse racing - there is a good amount of liquidity. Use Smarkets whenever you can.


Not a very popular exchange but an alternative nonetheless.
Betdaq’s commission is only 2%.
Overall Betdaq doesn't have a comparative advantage over Betfair or Smarkets so it’s best to not use this exchange often.


This exchange only charges 1% commission on both winnings and losses. Also, Matchbook has 0% commission for the Twenty 20 Cricket World Cup. On the other hand, Matchbook usually has very low liquidity across the market.
Matchbook also doesn't offer Horse racing which means we should only use this exchange mainly for sporting events, particularly European football.


This guide should help you make the right decision as to which exchange is best to use for placing lay bets at any given time.

The main exchanges you will use are Betfair and Smarkets, usually in favor of Smarkets because of the low 2% commission, however, if you don’t find enough liquidity and good lay odds in Smarkets then use Betfair.

Useful Guides:

Is Matched Betting Legal or illegal?

Video: What does liability mean in betting exchanges?

The fastest way to make money online

Emily Dawking

Emily Dawking

Squirrel Blogger

Housewife from London, previously worked 8 years for a PR agency until I had my beautiful twin boys.

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