Exchanges and Traditional Bookmakers Compared
Most exchanges make their money by charging a commission which is calculated as a percentage of net winnings for each customer on each event, or market. 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 a size unrestricted by the exchange - the only restriction is that one or more opposing customers need to be willing to match their bets. Moreover, the odds available on a betting exchange are usually better than those offered by bookmakers, in spite of the commission charged, because there are smaller overrounds.
In spite of these advantages, exchanges currently have some limitations. Because exchanges seek to concentrate their liquidity in as few markets (i.e. propositions) as possible they are not currently suited to unrestricted multiple parlay betting. Betfair does offer accumulators but these are limited in number and type: Users cannot determine the outcomes contained in accumulators themselves. Some exchanges also offer multiples but the exchanges act in the same manner as traditional bookmakers in doing so (i.e. they themselves and not a customer act as the layer of such bets). Exchanges also tend to restrict the odds that can be offered to between 1.01 (1 to 100) and 1000 (999 to 1).
A further advantage that traditional bookmakers retain over exchanges is that bookies are better willing and able to allow customers to bet on credit. There are two obvious reasons for this:
- Exchanges operate on much tighter margins, which lessens their ability to absorb bad debts.
- Allowing customers to bet on credit would likely compromise customer confidence in the financial integrity of an exchange, especially when one considers the effects of the ongoing credit crisis and the close association between betting exchanges and Internet betting in general.
That said, Betfair are licensed to give credit and have done in "exceptional circumstances".
Read more about this topic: Betting Exchange
Famous quotes containing the words exchanges, traditional and/or compared:
“When a girl marries, she exchanges the attentions of all the other men of her acquaintance for the inattention of just one.”
—Helen Rowland (1875–1950)
“The invention of photography provided a radically new picture-making process—a process based not on synthesis but on selection. The difference was a basic one. Paintings were made—constructed from a storehouse of traditional schemes and skills and attitudes—but photographs, as the man on the street put, were taken.”
—Jean Szarkowski (b. 1925)
“The earth is not a mere fragment of dead history, stratum upon stratum like the leaves of a book, to be studied by geologists and antiquaries chiefly, but living poetry like the leaves of a tree, which precede flowers and fruit,—not a fossil earth, but a living earth; compared with whose great central life all animal and vegetable life is merely parasitic.”
—Henry David Thoreau (1817–1862)