How Betfair Exchange Works: Complete Guide

This page contains affiliate links. If you open an account or buy software through them we may earn a commission, at no cost to you. It never changes our verdicts.

What is Betfair Exchange?

Betfair Exchange is a peer-to-peer betting marketplace. You bet against other users, not against Betfair. You can back an outcome (bet it happens) or lay it (bet it does not happen, taking the bookmaker's role). Odds are set by supply and demand. Betfair matches your bet with a user holding the opposite view, holds both sides' money, settles the market and charges commission on net winnings in each market.

A traditional bookmaker sets its own odds, builds a margin (overround) into them and takes the other side of every bet, so it profits when you lose. Betfair earns its commission whoever wins. Two consequences follow: prices without a bookmaker's margin, which are usually better, and the ability to lay, which makes trading possible.

How Order Matching Works

The Exchange works like a financial order book. Each bet is an order queued at a specific price, and the matching engine pairs back and lay orders at the same price.

1. You place a back bet at odds of 3.50, staking £100. The order enters the queue at 3.50.
2. Another user has a lay bet at 3.50 with enough liability to cover your stake. The engine matches them.
3. The bets are matched. Your £100 is committed and the layer's liability is reserved.
4. If you win, you receive (odds − 1) × stake = £250 profit, less commission. If you lose, the layer collects your £100.

With no matching order at your price, the bet stays unmatched. You can cancel it or change the price at any time. At the start of a horse race, remaining unmatched bets are either matched at the Betfair Starting Price (BSP) or cancelled, depending on your order settings.

The back column (blue) is money available to back at each price; it is lay money waiting in the queue. The lay column (pink) is money available to lay; it is back money in the queue. Betfair earns nothing from the spread: commission is charged separately on net winnings.

Back Bets and Lay Bets

Every matched bet has one backer and one layer.

Back Bets

A back bet is what you would place at a bookmaker: you bet an outcome will happen. If it does, you win (odds − 1) × stake. If not, you lose your stake.

Lay Bets

A lay bet is the opposite: you bet an outcome will NOT happen, acting as the bookmaker. If it does not happen, you collect the backer's stake. If it does, you pay the backer's winnings.

Your maximum loss is (odds − 1) × matched stake, called your liability. Betfair reserves it in your account when you place the lay, so you need funds to cover it.

For more detail, see Back Betting Explained and Lay Betting Explained.

How Odds Work on the Exchange

Betfair uses decimal odds only. Decimal odds are your total return per £1 staked, including the stake: odds of 3.00 return £3 per £1, which is £2 profit plus your stake. To convert fractional odds, divide the numerator by the denominator and add 1.

• Evens (1/1) = 2.00
• 2/1 = 3.00
• 5/2 = 3.50
• 4/1 = 5.00
• 10/1 = 11.00

Prices move in fixed increments called ticks, which widen as the odds rise:

• 1.01 – 2.00: increments of 0.01
• 2.00 – 3.00: increments of 0.02
• 3.00 – 4.00: increments of 0.05
• 4.00 – 6.00: increments of 0.10
• 6.00 – 10.00: increments of 0.20
• 10.00 – 20.00: increments of 0.50
• 20.00 – 30.00: increments of 1.00
• Above 30.00: larger increments

Tick size matters for trading: one tick at 3.50 is 0.05, at 1.20 it is 0.01. Scalpers measure profit in ticks per trade. See the Glossary for the full definition.

Commission and Fees

Betfair charges commission on your net winnings in each market; losing bets pay nothing. The base rate, the Market Base Rate (MBR), varies by market:

• UK/Irish horse racing: 2% (standard)
• Most other sports (football, tennis, etc.): 5%
• Some international markets: higher rates

Commission applies to the net result per market, not per trade. Ten trades in one race that finish £30 ahead pay commission on £30, not on gross turnover.

Rates and how they can be reduced are covered in our commission explained guide.

Liquidity: Why It Matters

Liquidity is the money available to be matched in a market. In liquid markets your orders match quickly at your price and you can exit positions cleanly. In thin markets large orders move the price, fills are slow and exits can be difficult. For a casual bet this matters little; for trading it is critical, because a position you cannot exit is risk you cannot control.

Rough matched volumes by market:

• UK horse racing (major meetings): £500K–£5M per race; Cheltenham Festival races often exceed £10M.
• Premier League football Match Odds: £5M–£15M total, with £2M+ matched in-play.
• Grand Slam tennis finals: £2M–£5M.
• Championship football: £500K–£2M.
• League Two / minor tennis: under £100K, too thin for most active trading.

Beginners should stick to UK horse racing and Premier League football. See the Horse Racing Trading Guide and Football Trading Guide.

What Markets Are Available?

Betfair Exchange covers dozens of sports. The most used for trading:

• Horse Racing: Win, Place, Each Way and Forecast markets. Win markets are the most liquid.
• Football: Match Odds (1X2), Over/Under Goals, Both Teams to Score, Correct Score, Asian Handicap and more. Match Odds is by far the most liquid.
• Tennis: Match Betting, Set Betting, Correct Score. In-play prices swing sharply, which suits experienced in-play traders.
• Cricket: Match Betting, Series Winner, Man of the Match.
• Greyhound Racing: Win markets at UK and Irish tracks. Less liquid than horse racing but enough for smaller stakes.
• Golf, Basketball, American Football, Rugby: available, with lower liquidity.

How Trading Works on Betfair

Trading means backing and laying the same selection to profit from the price movement, whatever the result. Back a horse at 4.00, and if the price shortens to 3.20 you can lay it there. With the right stakes, the two bets lock in a profit whether the horse wins or loses.

For strategies, start with What Is Betfair Trading?, then Scalping and Swing Trading.

Active traders generally use third-party software such as Bet Angel or Geeks Toy for a trading ladder and one-click back and lay execution. See our software ranking.

Exchange vs Traditional Bookmaker

• Odds: bookmakers build a margin into their odds; Exchange prices carry no bookmaker margin, so they are usually better, especially on longer-priced selections.
• Laying: only possible on the Exchange.
• Account restrictions: bookmakers regularly restrict or close winning accounts. Betfair Exchange earns commission from winners, so it has no reason to (the Premium Charge above aside).
• Trading: only the Exchange lets you exit a position mid-event at a market price.
• Commission: the Exchange charges commission on net winnings; bookmakers charge nothing explicitly because the margin is in the odds.

See Exchange vs Sportsbook, and for other exchanges Betfair vs Smarkets and Betfair vs Betdaq.

Getting Started

Opening an account takes about 15 minutes. You need an email address, proof of identity (passport or driving licence) and a deposit method. Our account opening guide covers each step.

Start small: £50–£100 is enough to learn with. Never trade money you cannot afford to lose. Read the Responsible Gambling page and set deposit limits before your first deposit, not after a bad session.