Betting exchanges will often offer better odds than a standard sportsbook. It’s a fact of gambling life but just why should this be case? The regulation bookmaker has to keep his ‘back’ price relatively low or otherwise, he could be exposed by a phenomenon known as an arbitrage bet.
Arbitrage, or arb betting occurs in a market where odds are placed on two outcomes in such a way as the bettor can guarantee a profit. In a tennis match for example, there are only two possible winners and if the bookies quote prices that are too high for each player, the customer does a quick calculation and stakes their money in such a way that a win is certain to drop in.
For that reason alone, the bookmakers’ win odds in any event have to be fairly low. In the digital age, there is software around that can spot an arb opportunity and the bookies are certainly not going to set themselves up to lose.
Setting odds at a Betting Exchange
The odds at Betting Exchanges are set by the customers but in the early stages of a market, professional traders step in to build up the liquidity. At that point, the figures declared are very conservative and may well be lower than those offered by a standard sportsbook.
From that point, regular customers get involved by backing or laying a particular event and the prices then start to fluctuate. In turn, those customers start to set their own prices and this is where things can really start to get interesting.
The Crucial Period
Serious price changes can then be found in the two to three hours before an event takes place. Price setters react to news and updates over a horse, a football team or an individual sportsman and declare their odds accordingly.
This is the point when the higher prices kick in as the bookmakers’ margin, known as the over-round, starts to disappear. Punters are setting their own odds and while many follow the market, others will set a higher figure in an attempt to snare some money.
With customers free to set and accept their own prices, back and lay odds will rise and in the vast majority of cases they will exceed those declared by a traditional bookmaker. The only exceptions to this rule tend to be in less popular events where there is relatively little interest and subsequently there is low liquidity.
When to act
The best prices can always be found in the final few hours of an event and in some cases, the odds can be spectacular. If you come up against an odds setter who isn’t quite in tune with the rest of the market, you can find odds of up to 1001.00 on winning outcomes.
That may be a rarity but with bookmakers unable to set high prices for fear of setting up an arb, betting exchanges such as WBX will often give you the best odds for sporting events.