Betting exchanges such as Betfair and Betdaq have revolutionized the way many punters now place their bets. The most obvious benefit the exchanges offer over the traditional high street bookmaker is the ability to lay bets on horses to lose their race, as well as the conventional practice of backing them to win.

The pioneer in exchange betting is Betfair and today it operates the most popular betting exchange website.

Essentially, Betfair brings together individual punters with opposing views, and cuts out the traditional bookmaker. All bets on Betfair have been placed there by users who either want to have a bet in the normal way (backing), or offer odds to other punters (laying).

Bets are matched between people with opposing views.

When you "back" a selection (be it an individual, a team, horse, dog or other), you are betting that it will win. This is just like betting with conventional bookies.

When you "lay" it, you are betting against it winning. For example, if you're betting in a market on which team is going to win the Premiership and you lay Man Utd, you offer odds to other punters who wish to back Man Utd. If Man Utd do not win, then you pick up the backer's stake. If Man Utd wins, then you pay out. This is what bookmakers traditionally do.

Listed below are ten compelling reasons to join the revolution and bet on the exchanges:

Better odds: when you place a bet on a betting exchange you do away with the bookmaker, who has traditionally acted as the middle man. As with any other ‘middle man’ the bookmaker takes his cut. He will always attempt to construct his ‘book’ and manipulate prices downwards such that whatever the outcome he will make a profit. By taking the bookie out of the equation you can generally get odds on Betfair 20% higher, which means more profit.

Lay as well as back: in the past you would only win your bet if your selected horse won its race. Betfair also allows you to act as bookmaker and lay a bet that a horse will NOT win the race. If your selection doesn’t win, then you collect!

Trading for guaranteed profits: on the betting exchanges you can take advantage of movements in the price of a horse to secure guaranteed profits – much like trading the financial markets. Profit whatever the outcome of a race? Impossible you might think…. I will give you an example to demonstrate:

Let’s imagine you have a horse priced at 3/1 in a race. You think the price of this horse will shorten because it is well fancied. You back the horse for a stake of £100.

The price of the horse falls to 2/1 just before the race starts as lots of punters also back the horse. You then lay the horse for £134.

Now, let’s examine how you will make a profit. There are only two outcomes for your horse – it will either win the race, or it will not win the race.

If it wins, you will win £300 (£100 @ 3/1). However, you will have to pay out on your lay bet – you will pay out £268 (£134 @ 2/1). Your profit is £300 less £268 equals £32

If your horse loses, you will win your lay bet and collect £134. However, you will lose your £100 win stake, and be left with £34 profit.

So you see, by backing the horse at one price and then laying it back at a lower price, you can guarantee yourself a profit, before the race even starts!

This process can also be done in reverse, in other words you can lay a bet on a horse to lose, then when its price drifts you can back it to ‘lock in’ the profit.

Name your price: before the appearance of betting exchanges, when placing a bet on a horse you would have to take the price offered by the bookmaker. If the odds offered on a horse were 2/1 and you said you wanted 3/1 you would be laughed out of the shop. Not so with Betfair. If you want to back the horse at 3/1 then you can post this request on the web site, and if someone else wants to lay that bet then your bet will be matched.

Bet in running: Betfair allows you to continue betting on an event, even after it has started. This capability brings with it a whole new betting experience, but it’s not for the faint hearted. As you might expect, the betting market for a horse race can change dramatically and extremely quickly, as horses jostle for position in a 5 furlong sprint which is over in less than a minute! Pitting your judgment and opinions against other punters as the race unfolds is very exciting, but equally risky. However, it is an experience that the traditional bookmaker simply cannot hope to match.

Never have your account closed: we have all seen the photocopied letters from bookmakers giving notice of closed accounts. The truth is, when you consistently make a profit from betting, then your business becomes a liability for a bookmaker. He is only happy to take your bets if over time he is taking more money from you, than he is giving back. When it happens the other way around, which is what all punters are striving for, then the bookmaker will invariably pull the proverbial rug from underneath you. By contrast, Betfair will never close your account. They charge a commission based upon your winnings, so in fact as long as you are winning, then they are making money too.

Unlimited stakes: I can remember plenty of times when I have received word about a horse and visited my local bookmaker to place a bet. When I asked to have £500 on the horse at 12/1 the assistant behind the counter would scurry into the back room to speak to the manager, then return to say I could have a pathetic £20 @ 12/1 but the rest would have to be at the Starting Price (which as we all know is controlled by the bookmakers). This does not happen on the exchanges. If you post a request to back your horse for £500 at 12/1 and someone else is willing to lay the bet at that price (or it could be a number of people whose total stake matches yours) then you will strike your bet.

All of your betting bank in one place: most of us have at some point opened accounts with more than one bookmaker. We do this so that we can take advantage of whoever is offering the best price on a particular horse. However, by spreading our betting bank across a number of accounts, we are diluting our money – we may want to back a horse for £100 but find we only have £50 lodged with the bookie with the best price. Sure, we can move funds between accounts, but it all amounts to an inconvenience. Having all your funds with one betting exchange means you can have all your funds available to bet, and all your money can be made to work for you.

Wide range of sports: betting on the exchanges is not restricted to horse racing. Just as with the bookmakers, you can bet on a variety of sports, and quite a few other markets besides. Take a look on Betfair today and you may well be able to wager on sports such as Australian Rules football, pelota(?) and ice hockey. But you can also bet on the financial markets, politics, and even the contestants in game shows such as Big Brother.

Place your bets 24 hours a day: how many times have you opened the Racing Post at 8:00am at the breakfast table, and read about the Pricewise bet of the day? You obviously cannot bet at the local bookmakers because their shop doesn’t open til 10 o’clock. But you think, hey, I’ll place a bet on-line – you go to their web site and they haven’t priced the race up yet! With Betfair you can bet when you want. You can take advantage of early prices before everyone else starts betting on the same horse and the price collapses. You can post all your bets before you go to work, taking the odds available, or naming your price.