A sport betting exchange acts as a broker in between customers and books for the placement of sports bets.
The idea of online stock exchange is simulated here the only difference is the traded commodity is a sports bet rather than stock of a company. A fixed odd is chosen in this type of gambling. This concept was first introduced in United Kingdom to perform transactions of one person to another person. Later it spread to all parts of the world with better features and services.
The betting exchanges get the money from the commission that they charge for each transaction. This is calculated as a percentage of the total wins that a customer gets on each event or in a market. Generally the activity of a bettor is controlled to a particular limit by the books. When a bettor is found to get too much of money he may be restricted from further betting by the bookmakers. But betting exchanges do not impose such limits on the customers. The only obstacle is the willingness to oppose the bet. There should be someone to bet against the bettor. The odds placed in the betting exchange are more favorable to the bettors. There is no agent acting for the customer hence he need not pay the commission for them.
The limitation imposed to the betting exchange is limited to parlay betting.
The case of accumulators is limited. But the betting exchanges have the right to offer a lay. This takes into consideration of the failure as a support to favor the winners. In the situation when then a team loses the book will backup the stake. The lay will pay the bettor based on the odds agreed according to the terms and conditions. The success of the betting exchange depends on backers and layers.