Back
A bet that an outcome will happen. You take the odds on offer and win if it happens.
What Is a Betting Exchange? How Back and Lay Betting Works
Back, lay, liability, liquidity and commission explained, with one worked example and the exchanges our broker register opens.
A betting exchange is a platform where bettors bet against each other instead of against a bookmaker. You can back an outcome (bet that it will happen) or lay it (bet that it will not), and the exchange matches opposing bets at an agreed price. The prices come from the offers users post, and the exchange charges commission on your net winnings in a market rather than building a margin into the odds.
Betfair, Betdaq, Matchbook and Smarkets run exchanges of this kind. BetInAsia, AsianConnect, MadMarket and Sportmarket open exchanges through tools such as BLACK, Sharp Exchange, OrbitX, Edge and FairExchange.
The four brokers
Betting exchange definition
Picture a market place. At a sportsbook the bookmaker quotes a price, takes your stake and keeps the margin built into that price. On a betting exchange the other side of your bet is another user, and the exchange stands between you as a matchmaker paid by commission.
Betfair puts it in its terms: where customers bet with each other on its Exchange markets, it "acts as a facilitator and does not act as a counterparty", bar a few cases the same clause lists. Betdaq uses the same word, facilitator, for its customers' offers. Both also run a sportsbook beside the exchange, under separate rules: one site, two products.
Lay
A bet that an outcome will not happen. You win the backer's stake if it does not happen.
Liability
What a layer risks: the backer's stake times (odds minus 1).
Liquidity
The money waiting at each price. More money means bets match faster.
Commission
The exchange's charge, worked out on your net winnings in a market.
Matched and unmatched
A matched bet has an opposing offer. An unmatched bet waits in the order book until one arrives or you cancel it.
How does a betting exchange work?
Four steps take a bet from the first click to the payout.
Step 1: choose a market
A market is one question with several possible answers, such as who wins the match. Each outcome has an order book, which Polymarket's documentation defines as the list of all open buy and sell orders for a market: on an exchange, offers to back the outcome and offers to lay it, sorted by price.
Step 2: back or lay
Backing is a bet that the outcome will happen; laying is a bet that it will not. Either way you choose the odds and the amount, and you can accept a price already in the book or post your own and let it wait for a taker.
Step 3: your bet is matched
The exchange looks for an opposing offer at your odds or better. Betdaq's terms say that once two offers are matched they become a contract between the two customers.
Queue rules decide who is matched first. Matchbook matches on odds, then on time ("first in, first matched"). Smarkets matches in price-time priority and fills automatically at the best price available (and, incidentally, it matches on percentage odds underneath, whatever format you submit).
Step 4: settlement and commission
After the result the exchange settles every matched bet and charges commission "calculated by reference to your net winnings on a Market", in Betfair's words. Your stakes do not enter that sum, and a market that ends in a net loss for you carries no commission on Betfair or Betdaq.
Back bets and lay bets explained with an example
Backing 10 at decimal odds of 3.00 wins 20 if the outcome happens and loses 10 if it does not.
Someone has to take the other side, and that someone is the layer. These are round numbers for the arithmetic, and they stop before commission because each exchange publishes its own rate.
Back and lay bet example: stake, liability and result before commission
| Side | Stake matched | Decimal odds | Liability | If the outcome happens | If it does not |
|---|---|---|---|---|---|
| Backer | 10 | 3.00 | 10 (the stake) | +20 | -10 |
| Layer | 10 (the backer's stake) | 3.00 | 20 | -20 | +10 |
| Both sides together | 0 | 0 |
Before commission one side's gain is exactly the other side's loss, which is the whole idea of a matched bet. Commission then comes off the winner: commission = net winnings × the exchange's rate.
How to calculate lay liability
Liability = stake × (odds - 1). With a matched stake of 10 at 3.00 that is 10 × (3.00 - 1) = 20, exactly the backer's profit, because that profit is what the layer pays if the outcome happens. A lay bet's stake is what you win; the liability is what you risk.
We learn this formula first and the lay button second: above odds of 2.00 the liability is bigger than the stake, so a lay bet can cost more than it pays. (Smarkets, in its dead-heat rules, calls the two sides bets "for" and "against".)
Exchange vs bookmaker: the key differences
What do you swap, and what do you gain? The table sets the two models side by side.
Betting exchange vs bookmaker: the key differences compared
| Feature | Betting exchange | Bookmaker |
|---|---|---|
| Who sets the odds | Users, through the offers they post | The bookmaker, which quotes fixed odds on each outcome |
| Who takes the other side | Another user; the exchange acts as a facilitator | The bookmaker |
| How the operator earns | Commission on your net winnings in a market | A margin built into the odds |
| Backing and laying | Both: you can back an outcome or lay it | You bet that an outcome will happen, at the odds shown |
| What a price is | The best offer someone has posted, with an amount behind it | The bookmaker's quote for an outcome |
We prefer commission on net winnings to a margin baked into every price: the rule is stated up front, while a margin sits inside the odds.
How do betting exchanges make money?
Commission is the model, and we like that it follows a stated rule instead of hiding in the price.
On Betfair, Betdaq and Matchbook commission is calculated on your net winnings in a market, and Smarkets applies its default rate the same way. Betfair and Betdaq take no commission on a market that ends in a net loss. Rates belong to each exchange, and on some of them the rate follows where you live or how much you bet; Smarkets' Pro and Select tiers apply to each bet, win or lose.
Betfair's charges page says that for the vast majority of Exchange customers, commission on net winnings is the only charge paid to Betfair. A small number of customers meet extra charges, such as Transaction Charges for very heavy traffic or the Expert Fee, and the Betfair page sets them out.
Liquidity: why it matters
Liquidity is the money waiting to be matched at the prices on offer.
Polymarket's documentation describes the order book as bids, the highest prices buyers will pay, and asks, the lowest prices sellers will accept, with the gap between them called the spread. Tighter spreads, it says, signal more liquid markets. On a betting exchange the picture reads as back offers on one side and lay offers on the other: a narrow gap and plenty of money behind each price means your bet matches quickly, while a thin market leaves part of it waiting for a taker.
The same pages warn that a large order can move the price sharply, and we would look at the depth of the book first on any exchange (even a Polymarket market order is technically a limit order, priced to fill at once).
Thin markets are the weak point, and operators say how they handle them. Betfair's terms allow it to act as counterparty occasionally on markets with little liquidity, Betdaq's let its operator and associated companies place bets to seed liquidity, and Matchbook and Smarkets partner with liquidity providers, Smarkets "in order to ensure price coverage on the maximum number of markets".
What happens to unmatched bets
An unmatched bet is an offer nobody has taken yet. Betfair lets you request a cancellation at any time, treats an amendment as a cancellation plus a new bet, and cancels any offers still outstanding when it closes a market. Matchbook says an offer can be recalled until another participant matches it. Kalshi calls such orders "resting orders".
Which betting exchanges can you use?
Exchanges and the companies behind them
Four exchanges publish their own rules, and the table names the company that runs each one.
Betfair, Betdaq, Matchbook and Smarkets: operator, role and matching
| Exchange | Operator in its terms | Role and matching |
|---|---|---|
| Betfair | Betfair International Plc, TSE Malta LP or Betfair Pty Limited, by residence | Facilitator between customers, with exceptions its terms list |
| Betdaq | Exchange Platform Solutions Ltd | Facilitator; a matched pair is a contract between two customers |
| Matchbook | Triplebet Limited | Odds first, then time ("first in, first matched") |
| Smarkets | Smarkets (Malta) Limited | Price-time priority, with best price execution |
Reaching exchanges through a broker
A broker is the other route: one account that opens several platforms. New to the term? Start with what a bet broker is.
In our register BetInAsia opens 8, AsianConnect 2, MadMarket 8 and Sportmarket 7 of the eight exchange entries below. They include two prediction markets, Kalshi and Polymarket, and Mollybet, whose site describes a trading platform with a Molly Exchange of its own; the Mollybet platform page sets out both roles.
Betting exchange entries in the register and the tool that opens each at BetInAsia, AsianConnect, MadMarket and Sportmarket
| Betting site |  BetInAsia |
 AsianConnect |
 MadMarket |
 Sportmarket |
|---|---|---|---|---|
| Betdaq | BLACK | Not listed | Edge | Available |
| Betfair | Sharp Exchange | Piwi247 OrbitX | Sharp Exchange Edge | FairExchange |
| Kalshi | BLACK | Not listed | Edge | Not listed |
| Polymarket | BLACK | Not listed | Edge | Available |
| Matchbook | BLACK | Not listed | Edge | Available |
| Mollybet | BLACK | Not listed | Edge | Available |
| Orbit Exchange | Sharp Exchange | OrbitX | Sharp Exchange | FairExchange |
| Smarkets | BLACK | Not listed | Edge | Available |
BLACK at BetInAsia and Edge at MadMarket are trading platforms with several exchanges behind one account. Sharp Exchange, OrbitX and FairExchange are exchanges: MadMarket calls Sharp Exchange peer-to-peer, and Sportmarket presents FairExchange as its own peer-to-peer exchange.
We like a route that names its tool: the matrix tells you which door you are opening before you sign up. For the whole field, see the exchanges you can access via a broker or the list of betting exchanges.
Pros and cons of betting exchanges
Pros
- You can lay as well as back, so you can take either side of an outcome.
- Prices come from users' offers, queued by price and time.
- Commission is worked out on net winnings in a market, and Betfair and Betdaq take none on a net loss.
- Stake and liability can be worked out before you bet, and commission follows a rule the exchange states.
Cons
- Commission replaces the margin, so a winning market gives the exchange a share of the win.
- Above odds of 2.00 a lay bet carries a liability bigger than its stake.
- Liquidity depends on the market, so part of a bet can wait unmatched.
- Each exchange writes its own rules for matching, cancelling and charges.
How to place your first exchange bet
The same five steps apply on any exchange.
- Choose a market and the outcome you have a view on.
- Decide whether to back or lay it, then read the offers already waiting in the book.
- Enter your odds and stake. For a lay bet, work out the liability first: stake × (odds - 1).
- Place the offer. Whatever does not match waits in the book until a taker arrives or you cancel it.
- After the result the exchange settles the bet and takes commission from your net winnings in that market.
Start small
Keep the first stakes low while you see how matching behaves. A bet that matches in part is normal.
Betting exchange FAQ
How does a betting exchange work?
Users post offers at the odds they want. When a back offer and a lay offer agree on odds and stake, the exchange matches them and the two users have a bet with each other. After the result it settles the bet and charges commission on net winnings.
What is commission on a betting exchange?
Commission is the exchange's charge for matching bets. On Betfair, Betdaq and Matchbook it is worked out on your net winnings in a market, and Smarkets applies its default rate the same way.
What is the difference between back and lay?
A back bet wins if the outcome happens. A lay bet wins if it does not, and the layer carries a liability of stake times (odds minus 1). At odds of 3.00, backing 10 wins 20, while laying that bet risks 20 to win 10.
What is liquidity?
Liquidity is the money waiting to be matched at the prices on offer. In a thin market part of a bet can stay unmatched until another user takes it.
Which exchanges can I reach through a broker?
In our register BetInAsia opens 8, AsianConnect 2, MadMarket 8 and Sportmarket 7 of the eight exchange entries, which include two prediction markets. The matrix on this page shows the tool at each broker.
What is the difference between a betting exchange and a prediction market?
A betting exchange quotes odds that you back or lay. Polymarket's documentation describes shares priced between $0.00 and $1.00 in an order book, where the price is the probability of the outcome.
Next steps
- See the list of betting exchanges for every exchange in the register.
- Read the Betfair page for the routes that open its markets.
- Learn how prediction markets differ from exchanges.
- Compare the best bet brokers if you want several exchanges behind one account.
Where to go next
Verdict? Learn the 10 at 3.00 example until the liability formula is automatic, then read the matching and cancelling rules of the exchange you pick.