Betting Exchange

Betfair pioneered the betting exchange model in the early 2000s and remains the dominant exchange globally. The structural feature is that the platform doesn't take on bookmaker risk: it matches buyers and sellers of bet positions and earns commission on the winnings of the successful side. This makes exchange margins more predictable than bookmaker margins and removes the trader's risk management complexity, but it also requires deep liquidity to function. Exchanges have a smaller addressable audience than traditional sportsbooks because the model requires more sophistication from the player (understanding lay bets, exposure, matched markets). They're popular with professional and semi-professional bettors who value the tighter margins and the ability to lay (bet against) outcomes. Regulators in some markets treat exchanges separately from traditional bookmakers, sometimes with different licensing or tax structures.