Betfair is the world's largest betting exchange where hundreds of thousands of people place bets directly with each other.

Betting with other people through Betfair removes the need for a bookmaker or "house", allowing exchange users to bet directly with other exchange users at a price and amount that they both agree upon.

All Betfair does is hold the money for every bet and then pays out the winner with the loser's money, taking a small percentage (2%-5%) from the winning side.

Betfair has no control over the prices and will not close or restrict winning accounts, like bookmakers do, because their profits aren't affected by winning accounts in the same way a bookmaker's profits are.

Betting against other people on Betfair, instead of betting against a professional bookmaker, means that the bookmaker's profit margin is removed from the prices, meaning that prices on Betfair are on average 20% better than the same prices offered by the bookmakers.