Betting exchange is very important in arb betting. With a betting exchange you can act very much like a bookmaker, setting odds on different events and to take peoples’ money for these events. You have the option to set the odds on an event that will happen, and to set the amount of money you are willing to allow bet on.
Betting exchange is very similar to a stock exchange, and it is also seen as some kind of peer-to-peer gambling website, where the peers – arbers – are betting against one on the other. The bets are accepted and offered simultaneously through the exchange's technological interface.
It is very important to understand that betting exchanges may be as fast as stock exchanges. Odds may rise or down very quickly, often leading to arbitrage situation even on the same market of the betting exchange. Surebets between betting exchanges and other bookmakers happen often but may be very short and the profits may not cover even exchange commission. Arbicharge.com allows you take commission into account then you include arbs from betting exchanges so you will be sure that surebets is still profitable for you.
Basically by allowing people to bet on an event you are “laying” a bet, meaning that you are betting against the outcome of an event happening. This is something that occurs frequently on betting exchanges. Laying is not very different from the arbitrage, that uses different bookmakers. Arbitrage using back and lay side is possible if a lay bet on one exchange provides shorter odds than a back bet on another exchange or bookmaker. However, the commission charged by the bookmakers and exchanges must be included into calculations.
If you don’t understand this, try to imagine yourself walking into a betting shop and placing a bet. For each bet you place, the bookmaker is basically laying a bet. This means the bookmaker is betting against the event happening, while you are betting that the event will happen. If you loose the bet, the bookmaker will keep your money, and vice versa: if you win the bet, you will take the bookmakers money. A betting exchange puts you in the place of a bookmaker.
If you find odds to back an event which are higher than the odds to lay an event, you can make a profit - and an arbitrage bet. Let’s say at a normal betting site the odds on Leeds to beat Chelsea are 9/1 (decimal odds of 10). The odds at the betting exchange to lay Leeds to beat Chelsea are 4/1 (decimal odds of 5). If you place $10 on Leeds to beat Chelsea at the bookmakers site, and if Leeds wins, you earn $100, a profit of $90.
If you lay $10 on Leeds to beat Chelsea at the betting exchange site, then if Leeds wins you have to pay out pay out $50, a loss of $40. So finally you will have an overall profit of $50. Even if Leeds draw or lose, you will still have a profit of $40. Leeds draw or lose, we will lose our $10 at the bookmakers site. At the same time at the betting exchange you will receive $50 back – a profit of $40.
Please note that these odds are exaggerated, and are very uncommon. Usually the difference between odds when an arb is formed is around 0.20, not 5. But you can still make nice profits, if you bet large amounts of money. Instead of betting $10, you could try betting around $300.