Not many companies can claim to have revolutionised an industry but Betfair can and it's all thanks to one product - the Betfair Exchange...
Before the Exchange arrived on the scene, punters could only place back bets and all with a bookmaker who typically added a margin into his markets.
The Betfair Exchange democratised this process by allowing customers to place lay bets as well as back bets.
What is a lay bet?
A lay is essentially betting on something not to win. Think of any bet as a transaction and the lay bet is simply the other side of the back bet. When you back an eventuality the person or firm paying out your winnings has laid your bet. The layer will either keep your stake if your bet loses or pay out at the agreed odds if you're a winner. For more, check out our guide to lay betting.
Bigger prices and in-play markets
With the Exchange's arrival then, instead of a handful of bookmakers setting prices there were thousands of Betfair customers backing and laying each other's bets. That competition had the effect of creating markets with almost negligible margins which resulted in prices that were typically more generous than those available with the traditional operators. And we still see this today - in 2017, the Betfair Exchange was best priced on 93% of horse races televised on ITV.
As it was Betfair's customers setting the prices and betting against each other, the company was able to let them bet throughout the event thus creating in-play betting markets. That was another revolution for the industry.
How to bet on the Exchange
Betting on the Exchange looks a little different to a Sportsbook as the back and lay prices are positioned next to each other but once you have got used to it there's nothing to fear! For starters, back and lay bets are coloured differently so there's little danger of placing an accidental lay.
And should a football match, horse race or any betting event go in your favour, the ability to lay gives punters the potential of making a 'green book' - a bet where every outcome is a winner, whatever happens.
That is because if you have placed both a back and a lay bet on a particular outcome you are supporting it both to win and lose. The key thing is that the event you have placed a bet on needs to be going in your favour so the prices move and you can take advantage of a shorter lay price to create a profit on your selection as well as all the other options in the market. This is also known as 'trading'.
A simple example would be as follows: you place a £10 bet on a football team at [4.0], so you will win £30 if that team wins and lose £10 if they don't win; happily for you, they go a goal up and instantly shorten into [2.0]; you then lay that same team at the shorter price for £20; this covers both your £10 stake and adds £10 of profit if the team you backed doesn't go on to win.
The Exchange also gives bettors the ultimate in control, by letting them choose their own odds. Don't like the price you see on site? Select your price and wait to get matched.
So whether it's taking advantage of bigger prices, betting in-play, more control or trading your way to a green book you can see why the Betfair Exchange revolutionised the industry and has gone from strength to strength. There were 1.5bn bets placed in 2017, with volume of £65bn. Give it a go today!
For more on the history of the Exchange, check out 'What is a Betting Exchange?