Learn Exchange Betting: How a Betting Exchange Matches Your Bet
A bookmaker quotes you a price. An exchange lets another bettor quote it. Everything on this page follows from that.
A betting exchange is a market where bettors' offers meet each other, with no bookmaker in the middle. You back a selection to bet that it wins, or lay it to bet that it does not, and the price is the one another user offered. A lay carries a liability: the amount you pay out if the selection wins. The exchange charges commission on your net profit in a market, not bet by bet. One worked example, a calculator for your own numbers and a ten-word glossary follow.
What exchange betting is
A bookmaker lets you back a team. An exchange lets you back it or lay it, and that one extra verb changes how every price, stake and fee works.
A betting exchange is a marketplace rather than a shop. Bettors post offers, other bettors take them, and the exchange sits between the two to match them and settle the result. The price on your screen is not a number a trader typed in. It is the best offer somebody has left standing.
Two verbs do all the work. To back a selection is to bet that it wins. To lay it is to bet that it does not win, which means you are the one offering the price to whoever wants to back it. On Orbit Exchange the back prices sit in blue cells and the lay prices in pink ones.
Nobody on the other side is managing a book against you. Your counterparty is another bettor, so how much you can stake is set by what other users have offered at that price. How much that is changes from one market to the next, and a section further down shows how.
On Orbit's betslip the same terms read Backer's Odds, Backer's Stake, Liability and Total Liability. Odds and stake belong to the backer. Liability is what a lay puts at risk. To see these labels on Orbit's own screen, start with the Orbit Exchange overview.
Back and lay, with one set of numbers
Every figure below can be rebuilt with a pen and the formulas in the text.
Take a three-way market: Team A, the Draw, Team B. We follow one selection, Team A, and we use a commission of 3%. That rate is an assumption for the example, nothing more. (If three outcomes feel crowded, Asian handicap markets drop the draw by giving one side a head start.)
The back. Early in the week you back £80 on Team A at 3.40. If Team A wins, the bet pays £80 × (3.40 - 1) = £192.00 of profit. If it does not, you lose the £80.00. The formula is back profit = stake × (odds - 1).
The price moves. By match day Team A has shortened to 3.00, so you lay £90 on Team A at 3.00. If Team A does not win, the lay pays you £90.00. If it wins, you owe the liability, and the formula is lay liability = lay stake × (odds - 1). That is £90 × (3.00 - 1) = £180.00.
The market adds up. If Team A wins, the back earns £192.00 and the lay costs £180.00, which leaves £12.00 of net profit in the market. Commission is 3% of that: £0.36. You keep £11.64. If Team A does not win (the Draw or Team B), you lose £80.00 on the back and collect £90.00 on the lay. That is £10.00 net, £0.30 of commission and £9.70 kept.
The example in three lines
Back: £80 on Team A at 3.40. Wins £192.00 or loses £80.00.
Lay: £90 on Team A at 3.00. Liability £180.00. Pays £90.00 if Team A does not win.
Market: Team A wins, £12.00 net, £0.36 commission, £11.64 kept. Team A does not win, £10.00 net, £0.30 commission, £9.70 kept.
Back is periwinkle, lay is apricot, what you keep is mint. Every bar is drawn against the £192.00 maximum, so £0.36 is a sliver.
Show the data table
| Line | Amount |
|---|---|
| Back profit | £192.00 |
| Lay loss | £180.00 |
| Net market profit | £12.00 |
| Commission | £0.36 |
| You keep | £11.64 |
Read the example for what it is: a mechanism with its numbers. Both outcomes leave a profit here because the lay was struck at a shorter price than the back, with a stake big enough to cover it (a £70 lay at 3.00 would lose £10.00 if Team A did not win), and only if someone takes your 3.00 lay in full. It is not a forecast, and commission and liquidity change the result every time you do it. The full back and lay guide takes the formulas further.
How a match is made
Two queues of offers. A gap between them. Nothing moves until one side crosses it.
Back offers wait on one side of a market and lay offers on the other. A match is made when a back offer and a lay offer meet at the same price. The part that meets is matched, and matched money is yours: it is a bet, with a stake, odds and a result. The part that does not meet stays an offer. It waits in the market at the price you set until somebody takes it or you cancel it.
Say you lay £90 at 3.00 and other users take £50 of it. You hold a matched lay of £50, with a liability of £100.00 (50 × 2.00). The other £40 is not a bet yet. It is an offer, waiting for a backer who wants 3.00.
Orbit's In-Play table has a Matched column, and a suspended market is flagged SUSPENDED.
Check your own numbers
Enter a side, a stake, decimal odds and a rate. The calculator returns the profit after commission, the commission, the loss, the effective odds and the break-even chance. It takes one position at a time. With several bets in one market, add their results first, then take the commission on the net.
It opens on the first position of the example: back £80 at 3.40 with 3%. It shows £5.76 of commission, +£186.24 of profit, effective odds of 3.328 and a break-even chance of 30.0%. That is the back on its own. Adding the lay changes the commission a lot, and the next section is about why.
One-bet calculator
Enter one bet and see what it pays, what it risks and what it is worth once commission is out.
Example shown: back 80 at 3.40 with 3% commission. One position at a time: with several bets in one market, add their results first, then take the commission on the net profit.
Why commission lands on the market, not the bet
Betting exchange commission follows one rule, and the betslip on Orbit Exchange states it in a line: "A commission is charged on net profit from each market." The tooltip adds the other half: "The amount that you win minus the charge." Two phrases carry the weight, net profit and each market.
Back to the example. Taken on its own, the winning back is £192.00 of profit, and 3% of that is £5.76. But the lay handed £180.00 of it back in the same market, so the profit that counts is £12.00, and 3% of £12.00 is £0.36. £5.76 against £0.36. Commission belongs to the market, which is why a calculator that sees one position shows more commission than the market charges once you hold the other side as well.
- Net market profit = the sum of your results on that outcome.
- Commission = rate × net market profit, when that profit is above zero.
- Effective odds = 1 + (odds - 1) × (1 - rate).
The same formulas price a single bet. At 3% the winning back at 3.40 is worth 1 + 2.40 × 0.97 = 3.328, so 3.40 becomes 3.328. I would not judge an exchange price until the commission is out of it. A 3.40 that pays like 3.328 is a different bet, and 3.328 is the figure to hold up against any other price. A market that ends in a loss carries no commission at all.
The rate itself is yours to enter. The 3% here is the example's assumption. On the Orbit tool at AsianConnect (OrbitX), MadMarket (Sharp Exchange) and Sportmarket (FairExchange) the commission is also 3%, charged on winning bets. Put the rate that applies to you into the calculator above, or use the commission calculator to see the commission side on its own. Every price on this page is decimal; if you think in fractions or American odds, convert them first.
What a lay puts at risk
Fine. Now the part nobody enjoys. A back bet can lose only its stake. A lay can lose a multiple of its stake, and the odds set the multiple.
Lay £60 at 3.40 and the liability is £60 × (3.40 - 1) = £144.00. If the selection does not win, you collect £60.00, or £58.20 after a 3% commission. If it wins, you pay £144.00.
Liability is the line people skip
Take the same £60 lay at a longer price. At 12.00 the liability is £60 × (12.00 - 1) = £660.00. The stake did not move. The amount that can leave your account goes from £144.00 to £660.00, about 4.6 times as much.
I size a lay by its liability, never by its stake. The stake is the small number on the slip. Liability is the one that decides whether the position fits your balance, and Orbit's betslip carries two labels for it, Liability and Total Liability.
Exchange or bookmaker: what changes
Neither wins in the abstract. They charge you in different places.
Bookmaker
The bookmaker quotes the price, and the price already carries its margin.
- Who sets the price: the bookmaker.
- Who carries the risk on your bet: the bookmaker.
- What you pay: the margin inside the odds, with no separate line on the slip.
- What you can do: back an outcome at the price on offer.
Best for: small recreational stakes where you want no sums to do.
Not ideal if: you want to choose your own price, or bet against an outcome.
Exchange
Other users quote the price, and the exchange takes commission on net profit.
- Who sets the price: the bettors, through the offers they leave in the market.
- Who carries the risk on your bet: the bettor on the other side.
- What you pay: commission on net profit in each market.
- What you can do: back, lay, or leave an offer and wait.
Best for: comparing prices after commission, and wanting both sides of a market.
Not ideal if: you want an all-in price with no sums, or you bet a thin market at 3 a.m.
To see how prices stack up between places, compare betting odds before you stake. To weigh one exchange against another, see how exchanges compare.
Deep markets and thin ones
Depth is what other users have offered, at each price, right now. A top fixture on Saturday afternoon is crowded, with offers stacked at price after price. A third-division line at 3 a.m. is a handful of offers with long gaps between them. Same exchange, same rules, different room.
Liquidity has a gravity of its own: busy markets attract more bettors, so they get busier. A price is only worth the stake behind it. Market depth and liquidity goes further into how depth limits what you can stake.
Suppose you want £400 on Team A at 3.40, and only the market caps the stake. If £400 is on offer at that price, the back makes £960.00 of profit, or £931.20 after a 3% commission. If only £150 is on offer, £150 is matched and makes £360.00 (£349.20 after commission), and the other £250 waits as an offer until someone takes it or you cancel it.
Ten words you will meet
- Back: a bet that a selection wins.
- Lay: a bet that a selection does not win, made by offering the price to a backer.
- Stake: the amount put on a bet; on a lay it is the amount you win if the selection does not win.
- Liability: what a lay costs you if the selection wins, worked out as lay stake × (odds - 1).
- Matched: the part of an offer that another user has taken, which makes it a bet.
- Unmatched: the part still waiting for a taker; it is an offer, not a bet, and you can cancel it.
- Market: one question with its possible answers, such as Team A, Draw and Team B; commission is worked out per market.
- Commission: the exchange's charge on your net profit in a market; a market that ends in a loss carries none.
- Liquidity: how much money other users have on offer, which decides how much you can stake at a price.
- In-play: betting while the event is running; Orbit Exchange has an In-Play tab for it.
From the maths to the door
The mechanics above are those of any betting exchange, and Orbit Exchange is one: back and lay, a Liability line on the betslip, commission on net profit from each market. The same mechanics run on other markets, and a best-of series in esports is one worked example, and how an exchange bet compares with a multi-pick position is another. Getting to it takes a broker, and the Register link on Orbit's own page leads to one. AsianConnect, BetInAsia, MadMarket and Sportmarket all open the exchange, under three tool names between them (OrbitX, Sharp Exchange and FairExchange). Horse racing is another worked case: a withdrawn horse, a dead heat and an each-way bet each change the sums. Prediction markets are one more comparison: they quote the same chance in cents on a dollar, so a 41-cent contract reads as decimal odds of 2.439.
The access guide lays out the routes and how to choose between them, and the sign-up guide takes you through opening the account. A broker account also opens other places beside Orbit, which the page on betting brokers explains. If stake limits are what brought you to exchanges, betting without limits picks that thread up. The home page sorts all of this by situation if you are not sure where to start.
Reality check
Transparency is not an edge: you can see how a price is made, and so can everyone else. Most bettors lose over time, and a thin market adds a cost of its own, because the price you wanted is not there for the stake you wanted.
The example above shows how a bet is paid, not what will happen to yours. Use only money you could do without, and read responsible gambling before you start.