What’s the best betting exchange? What’s the advantage of using one over another? There’s a only 4 major players in this field, with Betfair leading the way. Let’s compare them…
Article Contents
1. Betfair
Betfair is the industry leader.
Betfair is the largest, most popular betting exchange. It was formed in 2000 and operates under a Gibraltar licence. From 2 February 2016, the company has been listed on the London Stock Exchange as “Paddy Power Betfair” due to the merger between the two firms.
Advantages
- Betfair has the most sports & markets of any betting exchange.
- It has the members, meaning that the liquidity beats that of any other exchange.
- There’s generally a lot of activity within the markets, meaning that you’ll seldom struggle to get a stake away (depending on it’s size, of course).
- It particularly excels Football and Horse Racing. There’s no betting exchange offering anywhere near as many inplay markets.
- The API enables the development of many professional betting programs. For more information, take a look at my posts on Betfair Trading Tools and Automated Trading Bots.
Disadvantages
- It’s not the cheapest to use. The top commission rate is set at 5%, and the bottom at 2% (paid on winning bets). Each Betfair user will be allocated a level on a weekly basis — the more you bet the less commission you pay.
- A Premium Charge was introduced in 2008, whereby approximately 0.5% of the most successful traders are charge around 20% of their earnings. Betfair was heavily criticised for introducing this confusing scheme, which undermined their very ethos of being “fair”. You can read more about it here.
2. Matchbook
Matchbook offers super-low commission.
Matchbook was formed in 2004, but only really grew in popularity after being acquired by a group of investors in 2011. Their aim was to increase the liquidity within their existing markets in order to compete with Betfair.
Advantages
- Low commission rate. Matchbook charges 2% on winnings to customers in the UK, ROI, Channel Islands and Isle of Man. Customers from the Rest of the world are charged 4%. Losing bets do not generate a commission.
- Matchbook claim to have “the most significant pool of US sports liquidity available“. This includes NFL, NBA, NHL and MLB.
- Excellent user interface. One of the best in the industry, in my opinion.
Disadvantages
- It has far less markets (including inplay) than it’s competitors. Matchbook does not challenge Betfair in this department.
- It has less liquidity than Betfair. This is particularly evident in the less-popular markets.
- There’s no API publicly available, meaning there’s a lack of products which can be integrated with the betting exchange. However, you can request access and they’re likely to grant access if they know your intention is to place bets.
3. Smarkets
Smarkets offers low commission.
Founded in 2008, Smarkets is the newest sports betting exchange. They’ve made it their intentions clear — they want to take on Betfair. In April 2014 Smarkets hit £500m lifetime trades — but took less than a year to double that, achieving the £1bn trades in March 2015.
Advantages
- Their 2% commission is very competitive and certainly gives an advantage over the industry leader, Betfair.
Disadvantages
- It has far less markets (including inplay) than it’s competitors. Smarkets does not challenge Betfair in this department.
- It has less liquidity than Betfair. This is particularly evident in the less-popular markets.
- There’s no API publicly available, meaning there’s a lack of products which can be integrated with the betting exchange.
4. Betdaq
Betdaq is the 2nd largest betting exchange.
Betdaq was founded in 2000 and acquired by Ladbrokes in February 2013. At the time Ladbrokes took over, Betdaq only had approximately 7% share of the online betting market in the UK and Ireland. At the time it was the main competitor to Betfair.
Advantages
- Decent amount of liquidity on most markets. It’s considered to be the 2nd largest betting exchange, behind Betfair.
- It’s the only other betting exchange with a public API. So it’s a great alternative exchange to Betfair for building bots and applications.
- Unlike it’s main rival Betfair, Betdaq doesn’t apply a Premium charge to their highest earning traders.
Disadvantages
- Betdaq used to offer 2% commission. But now they’re offering something similar to Betfair — starting at 5% and going down to 2%, depending on loyalty points.
- It has less markets (including inplay) than Betfair.
- It has less liquidity than Betfair. This is particularly evident in the less-popular markets.
- It hasn’t really progressed under Ladbrokes, presumably because there’s a conflict in interest between the betting exchange and the Bookmaker.
- Betdaq offers some excellent promotions, such as their current “0% commission for the first month” to new customers.
Conclusion
While there are cheaper alternatives to Betfair, its breadth of sports and markets, excellent liquidity and compatible applications means it remains the top betting exchange. But for casual bettors looking to operate in popular markets, then there’s every reason to consider Matchbook or Smarkets.
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