How does it work?
The basics
Let’s say you wanted to bet on a football match – your team have odds of 2/1 to win. You’d go to your favourite bookmaker’s website, put a tenner on your team and hope for the best.
If your team wins, the bookie will pay out £30: that’s £20 winnings + your original stake of £10. This makes you happy. 🙂
If your team has a bad day and gets smashed in, the bookie will pay out £0. This makes you sad. 🙁
The confusing part
Here’s the trick though, if you go to a betting exchange website, you basically become the bookie, and you can offer up your own odds and let people bet against you!
Now, at the same time as you make your first bet above, you surf along to your favourite betting exchange and offer someone the same odds (2/1) for your team to win in the same match, someone will (hopefully!) take that gamble and bet with you.
If your team wins and you have a bet on them and had someone bet against you, the bookie will pay you your £30, but you’ll have to pay the other punter £20 as he won his bet with you – this leaves you exactly where you started – with your original tenner. This makes you confused. 😐
If your team loses or draws and you have a bet on them and had someone bet against you, the bookie will pay you nothing, but you get to keep the tenner the punter bet you with. This leaves you exactly where you started – with your original tenner. This also makes you confused. 😐
The clever part
At the same time as you make your bet with your own money, you need to make an equivalent bet using the “Free Bet” your bookmaker gave you. You also lay another bet at the betting exchange which matches the odds.
Let’s say your bookie gave you a free £10 bet. This means you have two £10 bets with the bookie, and you’ll have two £10 bets with a punter at the betting exchange.
If your team wins, the bookie will pay out £60: that’s £20 winnings * 2 plus your stakes of £20. You’ll have to pay the punter £40 (£20 winnings * 2), leaving you with £20 in your pocket. You only had £10 to begin with – the other £10 is the free bet from the bookie that you’ve just cashed in! This makes you very happy! 😀
What if your team loses or draws, I hear you ask. You must lose out, I hear you say…
If your team does lose or draw, you lose your initial £10 stake to the bookies, but you get to keep both the £10 bets the punter made with you at the exchange, again leaving you with £20 in your pocket! This also makes you very happy! 😀
Someone must be losing out!?
Using this method, neither you or the punter you bet with at the betting exchange are getting fleeced. The profit you make simply comes from the free offers the bookies give you. You can bet against them with almost no risk and still make a profit!
That’s about it, really. It is very important to make sure that you’re betting on the same outcome of the match at both sites, and that you have the odds matched up. It’s also important to have patience – like I said before, this is not a “get rich quick” system, and it could take some time for you to get proficient enough at it to be making some serious money. If you give it time though, you’ll learn to spot the matches with the best odds to match!
The small print
This is, of course, a very simplified example of how Matched Betting works. In reality, the odds are likely to differ slightly between the online bookies and the betting exchange, and the betting exchange will usually charge you a small percentage [1-5%] of your winnings as their fee.