Betting Exchange Guide by Matched Betting Australia

A betting exchange is an online marketplace where punters bet against each other instead of against a bookmaker. The exchange (in Australia, Betfair) simply matches a back bet (a bet that something WILL happen) with a lay bet (a bet that the same outcome WILL NOT happen) and charges a small commission — typically 5% — on net winnings. Exchanges are essential for matched betting because they let you cover the opposite side of any bookmaker bet, locking in a profit. Betfair is currently the only licensed betting exchange in Australia.

You lay a horse on Betfair for $50 at odds of $4.00 with 5% commission.

• Backer's stake (your lay stake): $50
• Liability: $50 × ($4.00 − 1) = $150 (this is what must be in your Betfair wallet)
• If the horse loses or doesn't win: you keep the $50 backer's stake minus 5% commission = +$47.50
• If the horse wins: you lose the $150 liability

Learn how to size lay stakes correctly with our matched betting calculator.

• Bookmaker: Sets the odds. Takes the opposite side of every bet. Wants you to lose. Cannot lay bets.
• Betting exchange: Simply matches users. Never on the other side of a bet. Allows both back and lay. Charges commission only on winnings.
• Odds: Exchange odds are typically 2–5% better than bookmakers because there is no built-in margin.
• Limits: Bookmakers limit winning accounts. Exchanges welcome all customers — winners and losers alike.
• Use in matched betting: The exchange is where you place the lay side of every matched bet. Without it, matched betting is impossible.

A betting exchange is extremely similar to bookmakers, with one exception. Instead of betting against the bookmaker, with a betting exchange we bet against each other.

By this we mean if someone, for example, places a bet for Manchester United to win, we can match it by betting that Manchester United will not win.

The ability to bet against a result happening is the most important part of Matched Betting, and you will soon see why as you continue learning more about Matched Betting.

Have you signed up with Betfair yet? If not, click here and signup.

The biggest thing to remember with exchanges is that there are two sides to every bet.

To bet for something is known as a back bet

To bet against something is know as a lay bet.

In Matched Betting we will mostly be using lay bets when we are using Betfair.

Lets take a look at an example below of a soccer match between FC Basel and Man City.

The blue column represents the odds available to back an outcome and the pink column represents the odds available to lay.

If I think Man City will win the match, I would back Man City at odds of 1.35.

If I do NOT think Man City will win, I would lay Man CIty at odds of 1.44.

So in Matched Betting we will 99% of the time be placing our back bets at the bookmakers such as William Hill, Ladbrokes etc and only placing our lay bets at Betfair Exchange.

Lets use the same example as earlier to show you how easy it is to lay a bet with Betfair.

So we have decided that Man City will be our selection for this particular bet. We will lay our bet in three quick and easy steps.

Firstly, click on the pink box with odds of 1.44. A box as shown below will then appear.

Secondly, enter the lay amount we have calculated in our Matched Betting calculator in the empty space under "Backer's Stake".

The liability is the amount of cash you will need in Betfair to cover your bet. The lower the odds, the less liability is required.

And lastly, hit "Place Bets" and wait for your bet to be confirmed.

By placing this lay bet against Man City, we are betting that they will NOT win.

If you look below all the various odds in the Betfair Exchange, you will notice monetary values.

For example, the Man City lay odds of 1.44 has $36 of liquidity.

So as we are laying Man City, we can see that there is already $36 in liquidity for that specific market. This means we can stake anything up to $36 for this lay bet and it would get matched straight away.

We need to always make sure there is enough liquidity in the market before we lay a bet, otherwise we will be left with unmatched lay bets. Popular events will always have sufficient liquidity as time gets closer to the kickoff of that event.

• Back bet — A bet that an outcome WILL happen.
• Lay bet — A bet that an outcome will NOT happen.
• Backer's stake — On a lay bet, the amount the opposing backer has staked (and the amount you win if the lay succeeds).
• Liability — The maximum you can lose on a lay bet: lay stake × (lay odds − 1).
• Commission — Betfair's fee on net winnings, typically 5% in Australia.
• Liquidity — The amount available to back or lay at a given price.
• Matched — A bet that has been fully filled by the opposite side.
• Unmatched — A bet sitting in the market waiting for someone to take the other side.
• Market Based Rate (MBR) — Betfair's variable commission on Australian horse racing.

What is a betting exchange?

A betting exchange is an online marketplace where punters bet against each other instead of against a bookmaker. The exchange operator (in Australia, Betfair) simply matches a back bet from one user with a lay bet from another and takes a small commission on net winnings.

What is the difference between a betting exchange and a bookmaker?

A bookmaker sets the odds and takes the opposite side of every bet — they want you to lose. A betting exchange just matches users against each other and never has skin in the game, so the odds are usually better and you can both back AND lay any selection.

Is Betfair the only betting exchange in Australia?

Yes. Betfair Australia is currently the only licensed betting exchange operating in Australia. It is licensed by the Northern Territory Racing Commission and is essential for matched betting because it lets you lay outcomes — something you cannot do at any traditional Aussie bookmaker.

What is a lay bet?

A lay bet is a bet that an outcome will NOT happen. If you lay Manchester United at $1.44, you win the backer's stake if any other result occurs (draw or away win), but you lose your liability if Manchester United wins.

What is liability on a betting exchange?

Liability is the maximum amount you can lose on a lay bet, calculated as lay stake × (lay odds − 1). It is the amount that must be available in your Betfair wallet to cover the bet if it loses. You cannot lose more than your liability — losses are capped.

How much commission does Betfair Australia charge?

Betfair Australia's standard commission is 5% on net winnings on most sports markets. On horse racing, the commission rate (called the Market Based Rate) varies between 5% and 10% depending on the state and race code. Always check the 'Rules' tab on each market.

What is liquidity on a betting exchange?

Liquidity is the amount of money available to be matched at a given price. The dollar values shown beneath each price on the Betfair grid show how much you can back or lay at that price. Always confirm there is enough liquidity to cover your lay stake before placing a matched bet.

Can my Betfair lay bet be partially matched?

Yes. If there isn't enough liquidity to match your full lay stake, the bet may be partially matched, with the remainder sitting unmatched until liquidity arrives or the market closes. For matched betting, always lay only as much as the available liquidity.