The coming US presidential and UK General elections will be the first where the internet-based betting exchanges will be the primary betting arenas. Although they have been around in the UK for 4-5 years it is only in the last year or so that they’ve really taken off for political gambling.

The moment the exchanges came into their own for me was the day last November when the Tories were ousting Ian Duncan Smith. I was glued to Sky News with my laptop open at Betfair’s “Who will be Tory Leader at the General Election market?” At just on 5.30 pm – with the confidence vote ballot due to close in an hour – the IDS price indicated that he was doomed.

Then there was extraordinary activity around the price of David Davies. He had been trading at about 3, slightly behind Michael Howard, when his price just collapsed, first to 6-7 and then in a few minutes to 10. Somebody knew something and the information was travelling like wild-fire. I did not need to watch the TV news programmes – it was all unravelling on the betting screen.

I figured in an instant that a deal had been done with Howard and put as much as I could on as his price was dropping.

The other great advantage of the Betting Exchanges is that you can bet AGAINST something happening. The term is that you LAY bets that other people want to make on a specific outcome. Thus when, just after Christmas I started to have doubts about whether the runaway favourite for the Democratic nomination, Howard Dean, I was able to back my judgement without having to decide which of the other candidates were going to get it. I laid at an average of 1.7 which meant that for every £70 I risked I made £100.

Another great feature of the exchanges is that you can reduce your risk at any time. As Howard’s price rose I then backed him at a much bigger price than I had laid which meant that I would not lose whatever happened. This cut down my overall profit but made me feel a bit more comfortable.

A further advantage of using an exchange is that you can get out of positions which, on later consideration, you believe you called wrong. My main choice for the Democrat race became John Edward. I put a series of bets on but then it became clear to me, at least, that this was not going to happen so I laid the whole lot at a loss – but still not as bad as losing all your money.

The exchanges make their money by charging punters a commission on wining bets. They also get to hold onto both the backers and layers money for considerable periods. But generally the odds are better than you can get elsewhere and you have all the flexibility advantages. You can change your mind.

My main criticism is sometimes a lack of imagination in establishing novel markets. At the moment you cannot even bet on who Kerry’s running mate will be and there are no General Election seat markets.

The exchanges are much more sensitive than normal book-makers and they are most fun when a lot of people are betting in a market which is highly liquid.

For more details on exchange betting go to www.betexchangenews.com
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