Betting Exchange

Betfair is the world’s largest Internet betting exchange. The company is based in Hammersmith in West London, England.

Since Betfair was launched in June 2000 it has become the largest online betting company in the UK and the largest bet exchange in the world. Betfair currently has over 2,000,000 clients and a turnover in excess of £50m/week.^{[citation needed]}

A betting exchange allows punters (gamblers) to bet at odds set and requested by other punters rather than by a bookmaker. Members can make both ‘Back’ bets (normal bets on a selection to win) and ‘Lay’ bets (bets on the opposite side of the Back, against the selection), thereby eliminating the traditional bookmaker.

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The term betting exchange is used to describe a form of bookmaking in which the operator offsets its risk perfectly through technology, such that the effect to the customer is that customers are seen to bet between themselves.

Coined because of its apparent similarities to a stock exchange - it is often defined as “a stock exchange for bets” - it is therefore commonly seen as a peer-to-peer gambling website, when in fact it is more closely described as “many-to-many” (i.e. very few bets are actually just one person on one side and one on the other). Equally, it is often suggested, or commonly believed, that the operator is merely acting as a broker between parties for the placement of bets, rather than a bookmaker, although the reality is that bets are being accepted and offered simultaneously through technology, and the legal contract for the bet is with the operator itself and not between customers.

Most betting on a betting exchange has been a form of fixed odds gambling, although recently the phenomenon has also been established in the spread betting markets.