Betting exchange Australia: how Betfair works, what commission costs and when it beats a bookie

What a betting exchange is

A betting exchange is a marketplace where punters bet against each other. One punter backs an outcome to happen, another lays it (bets it will not happen), and the exchange matches them and holds both stakes until the result. The exchange does not take a side. It makes its money from commission on winnings rather than from a margin in the odds.

That changes two things for you. You can bet against an outcome, which a bookmaker will not let you do, and you can ask for your own price and wait to see whether someone takes it.

Betting exchanges in Australia

In Australia the exchange is Betfair. The Northern Territory Wagering Commission's list of licensed wagering operators includes Betfair Pty Ltd, trading as Betfair, and the NT says betting exchange operators are licensed under the Racing and Wagering Act 2024. Betfair's own site says Betfair Pty Limited is licensed and regulated by the Northern Territory Government, and calls itself "Australia's only online betting exchange".

Because it is a licensed Australian wagering provider, the same national rules apply as for any licensed bookmaker: 18+ only, deposit limits, BetStop, and no credit cards or crypto for deposits.

How to read an exchange market

Each selection shows two sets of prices. The back side shows the best odds other punters are offering to lay, and the lay side shows the best odds other punters want to back at. Under each price is the amount of money waiting at it.

A tight gap between back and lay usually means a busy market. If neither price suits, you can request a better one; Betfair says your offer then waits for the community to match it. By default, Betfair says unmatched bets lapse and are cancelled at the start of the event. For horse, greyhound and harness racing, Betfair Starting Price (BSP) locks your bet in at a starting price that Betfair works out from the back and lay bets placed in the market, and Betfair says SP bets cannot be cancelled once placed.

The full mechanics of the lay side, including liability, are on our lay betting page.

What Betfair charges in commission

Betfair takes commission from your net winnings in each market, at a rate it calls the market base rate (MBR):

Betfair's own example: $50 on a winner at $3.00 returns $150, net winnings are $100, and at 8% the commission is $8.00. Its FAQ says losing markets pay no commission. Betfair says the MBR varies because it reflects what the governing body charges Betfair.

The real price after commission

Commission only comes off profit, so an exchange price is worth a little less than the same number at a bookmaker. The equivalent price is 1 + (exchange odds - 1) x (1 - commission).

Turn it around and you get the exchange price you need to beat a bookmaker. In our calculation, matching a bookmaker's $3.00 takes $3.13 at 6%, $3.17 at 8% and $3.22 at 10%. Matching a bookmaker's $6.00 takes $6.32, $6.43 and $6.56.

The exchange often clears that bar. Betfair says its average overround on 2021 Australian Group 1 thoroughbred races before the jump was about 103%, against somewhere between 115% and 120% at some large bookmakers. Our bookmaker margin guide shows how to work out that total for any market yourself.

Commission is charged per market, not per bet

Because commission is on net winnings in a market, losing bets in the same market reduce it. Say you back two runners in one race at 8%: $20 on Runner A at $4.00 and $10 on Runner B at $6.00.

If commission were charged on Runner A's bet alone, it would be $4.80. The netting makes the exchange cheaper for anyone who bets more than one selection, or backs and lays the same runner.

Exchange or bookmaker: how they compare

A tote is a third model, where the operator takes a fixed share of the pool; our tote vs fixed odds guide compares it with bookmaker prices.

In-play on the exchange

Betfair's FAQ says horse racing in-play is available over both the internet and the telephone. That matches the Interactive Gambling Act, which bans online in-play betting on sport but treats racing differently. For sport, Betfair's FAQ says to call its telephone betting operators, and its phone minimum is $50. The rules, and what counts as in-play, are set out in our guide to in play betting in Australia.

Pundit tip: before you call an exchange price "better", convert it with the commission for that market. An NRL price at 10% needs a much bigger gap over the bookmaker than a soccer price at 6%.

Using an exchange for lays and hedges

Most punters use the exchange to back at a better price. The lay side opens up other uses, such as locking in a result on a bet you already hold, which is covered in our guide to matched betting in Australia and in the lay bet calculator. If you find yourself trading markets to win back losses, the gambling help page has free support.

Related reading

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