In the olden days, when a punter wants to make a bet on a particular sporting event or special event, he goes to a bookmaker who offers odds for the specific event the punter has in mind. The punter checks the odds that the bookmaker has, and then he places his bet depending on how favorable the odds look to him. There is no other way of placing bets. Traditionally, a punter has to go to a bookmaker to place his wager and nowhere else.

In the year 2000, however, this tradition was gleefully broken when Betfair first came into the consciousness of punters and bookmakers alike. Betfair had something new to offer, something not heard of before, something that had revolutionized the way online sports betting is made now. Betfair's came up with the system that is now called betting exchange.

In betting exchange, punters get to place wagers without having to approach a bookmaker. Betfair itself does not have bookmakers in its payroll. Instead of going to bookmakers, punters can make bets against other punters. Unlike in traditional bookmaking, there are no odds to be set. Instead, a punter makes his own offer and waits for anyone else to take him on his bet. If someone takes him on, then they wait for the outcome of the event they are wagering on. Whoever wins the bet gets the loser's money, and the third party wherein they made the betting exchange gets a small commission from the winner of the wager.

In the event that a punter makes his offer and no one takes him on, betting exchange system that he is using will declare the offer void. The punter then gets to keep his money, for use at a time another event worth betting on comes up.

The betting exchange effectively grants more freedom and control for the punter. Oftentimes, the odds are much, much better than in traditional sports booking services. This is because there are no bookmakers involved, so there would be no one worrying on whether or not the bookmaker will make some profit out of the betting event.

The betting exchange system also gives the punter the opportunity to bet that an outcome will not come to pass . In traditional bookmaking, only the bookmaker gets to bet that something will not happen; that is his role. In traditional bookmaking, if a punter wants to wager that something is not going to happen, he will have to make bets on alternative outcomes rather than the negative outcome.

And because betting exchange leaves the odds-making entirely on the hands of the punters, the punters can get creative and place bets on a wider variety of events. It also allows bettors to place wagers while the event is in progress. This is a total no-no in traditional bookmaking.

Betting exchange gives bettors more space to move and more options to work on with his betting money. But this does not say that he should stop going to traditional bookmakers. A punter should never stop shopping around for a good deal, and there are certainly some good odds out there with traditional bookmakers.