YOU rarely see a poor bookmaker, but few would dispute that the high street layers are facing more challenging times on their traditional mainstays.

While new mediums such as fixed-odds betting terminals are proving to be a goldmine, the established fixed-odds side of the bookmakers’ business has been hit by a relatively new phenomenon — the betting exchange.

Betting exchanges, such as Betfair and Betdaq, permit punters to bet with each other online. The system has grown to the point where millions of pounds are being matched on horse races every day. The exchanges also offer great diversity, with punts ranging from who will be the next leader of the Conservatives to how many wickets Shane Warne will take during the Ashes series.

Betting exchanges give the punter better value for money. Better odds are usually available because the online punters set the margins. Without having to cover bookmakers’ overheads, they can offer more competitive prices.

The popularity of betting exchanges has also forced on-course layers at race meetings to offer more competitive prices. One way that they do this is by using the betting exchanges to back horses that they have laid on course but at superior odds. The result is that starting prices have increased and high street bookmakers, who take their odds from the racecourse, have had to pay out greater amounts.

It is bad enough for the bookies when the favourites win at high-profile meetings. It is doubly bad that when they do win, the bookies have to pay back more to punters than in pre-exchange days.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive