A bet exchange or p2p
(player to player) exchange is a fairly recent
Internet phenomenon, and is used to describe a
web site acting as a broker between parties for
the placement of bets (gambling, in other
words). The concept is similar to that of a
stock exchange or a currency exchange, where in
this case the commodity being traded is a bet,
rather than a stock or currency.
The UK bet exchange
Betfair is one of many successful
implementations of the idea. The sites usually
make money by charging a commission which is
calculated as a percentage of net winnings.
Losers do not pay anything to use the exchanges.
Gamblers whose betting activities have
traditionally been restricted by bookmakers
(normally for winning too much money) have found
these sites a boon since they are now able to
place bets of unrestricted size, providing
always of course that there is someone available
to match them. Prices offered often tend to be
better than bookmakers despite the commission
charged.
These
exchanges also offer the opportunity to
lay outcomes, which is
to back that a particular participant in an
event will lose. This is the position bookmakers
take when offering a bet for somebody to back
that the participant will win.
For example, if I think Team A will win a
competition, I may wish to back
that selection. A bookmaker will lay
that selection. We will agree the backer's stake
and the odds. If the team loses, the layer or
bookmaker keeps the backer's stake. If the team
wins, the layer will pay the backer winnings
based on the odds agreed.
The fact that gamblers can now lay outcomes on
the exchanges has caused tremendous criticism
from traditional bookmakers with much of the
anger coming from the UK's "Big Three" - Coral,
Ladbrokes and William Hill. These firms argue
that granting who they consider to be anonymous
punters the ability to bet that an outcome will
not happen is causing corruption in sports such
as horse racing (since it is much easier to
ensure a horse will lose a race, the bookmakers
reason). Exchanges such as Betfair counter that
while corruption is possible on any gambling
platform, the bookies' arguments are motivated
not by concern for the integrity of sport but by
commercial interests. Exchanges also assert that
they are well aware of who their customers are
and Betfair in particular has noted that they
have signed numerous agreements with governing
bodies of sport including the Jockey Club, with
whom they insist they will co-operate with fully
if the latter suspects corruption to have taken
place
Sports Betting
