Most high street bookmakers now have an online site where you can place bets and gamble from the comfort of your own home but online betting exchanges provide a slightly different service.

When you place a bet with a bookmaker, you are essentially betting against the house. In a betting exchange, however, punters can place bets with other punters. For example, John visits a betting exchange to place a bet on Arsenal to beat Spurs at odds of 2.1. John`s bet is placed on the exchange awaiting someone to `match` it or, in other words, act as the counterparty for the bet. Later on, David visits the same exchange. He believes that Spurs will win and so, because he is happy with the odds John has offered, he takes on the other side of the bet. John and David are now betting directly against one another, without the need for a bookmaker to act as the middle man.

Betting exchanges are far more impersonal than that with punters constantly laying and matching bets against one another. The main advantage of such a site is the fact that you can `lay` bets, i.e. bet against something happening, as well as place them. This can be used in straightforward terms for events when you don`t think something will happen, or used as part of a more sophisticated scheme to offset betting liabilities elsewhere in order to reduce potential losses.

Key advantages offered by betting exchanges are; the opportunity to lock in a profit during, or even before, an event by trading the odds as they move around, the opportunity to bet in running, the chance to bet on a much larger selection of things for any given game or event and of course the fact that if you lose, there are no charges to pay. Betting exchanges make money by charging commission on net winnings, normally in the region of 5% for the average punter. Customers whose betting turnover is particularly high will benefit from reduce commission typically around 2%.

The biggest and most well known betting exchange is Betfair. The huge amount of customers visiting Betfair each day means that liquidity is good and you will almost always be able to find someone to match the bet you want to place (given the odds are realistic, that is). Betfair is simple and easy to use and often offers welcome bonuses for new customers.

Betfair has such good software and such market dominance in terms of liquidity that you could easily do all of your gambling with them but it is still worthwhile checking around every now and then to ensure you are getting the best possible odds. Betdaq are the next best betting exchange and whilst they come quite a distant second to Betfair in terms of customer numbers, their software has improved rapidly and on some occasions the time taken up checking the odds on Betdaq will be rewarded with better value odds. The other serious betting exchange is WBX but here liquidity is a serious issue and you should ensure that your bet is likely to be matched before committing yourself to linked bets elsewhere and if all that laying and matching gets too complicated, many sites also offer the chance to play bingo online.

On Betting Exchanges you do not bet against the bookmaker, but instead against other sports betting fans like you and me.

Additionally you can play the role of the bookmaker and offer (LAY) betting odds.

Essentially, betting exchange software allows you to bet against other punters directly instead of betting against a bookmaker. Online betting exchanges even allow you to play the role of the bookmaker and offer lay odds on a given match. Truly advanced sports investors even take advantage of betting exchange arbitrage or trading to score themselves a little extra.

As there is no central bookmaker with a betting exchange, there are many advantages available to punters. First and foremost, because there is no bookmaker, it is not necessary to pay a bookie's commission that is normally included in the odds. Small transaction fees are still assessed, but the margins are much better for you than with a traditional bookmaker.

Main Advantages:

a) the profit margin of the bookmaker is not there, so higher odds than at the normal bookie are possible. (although to be honest, you have to pay a small commission (only) on winnings) - on average Betting Exchanges offer up to 20% better odds than bookmakers;

b) You can 'sell' made bets and thus harvest the crop, before the match you had bet on is even started - thus being "in" on both sides of the bet!

There's now a growing trade in "made" bets, allowing you to buy and sell the work of other punters for a profit before a match even takes place. To profit on a sports betting exchange with this method you will want to keep a careful eye for detail. However, if regular betting has gotten stale then this is another venue to pursue.

The acknowledged market leaders amongst Betting Exchanges are BETFAIR, BETDAQ and MYBET