You know all about fixed odds. right? Perhaps you like to take five selections from the weekly football coupon, or maybe you have a telephone account that allows you to choose the first scorer. The latest addition to the gaming industry is exchange betting, which allows the punter to bet against fellow individuals via online sites such as Betfair, Sportingbet 121 and Betsson.

The idea is a simple one: these sites gain a bookmakers permit and create a platform that allows you to offer odds or to other users, or, place a bet in the usual manner. The key difference is that the operator of the exchange does not offer odds, instead relying on its users to create markets.

The important thing to consider is liquidity - if a market is popular then it is a case of supply and demand, with odds changing regularly as bets are placed. It is possible to make money on these changes alone in the build up to an event, as it is to cash in certain bets before an event actually finishes, as we will discover in future articles. However, if a market is quiet - some are more popular than others - then you may find better-than-expected odds featured as punters try and create some interest.

Exchanges have becoming increasingly easy to use and are growing in stature, much to the chagrin of the high street bookmakers such as William Hill and Ladbrokes, who believe that users should have to apply for bookmakers' permits from the government if they want to offer odds to other users.

Betfair, the leading exponent of exchange betting following its December 2001 merger with Flutter, has contested this and the recent moves to liberalise the gaming industry in the UK suggests that exchange betting will prevail. One thing's for sure - the exchanges are fast growing in popularity, as can be seen from the amount of matched bets Betfair handles every week, a figure that is now in excess of £45m, which will take the company's annual turnover to between £1.5bn and £2bn.

If you win a bet, the exchange operator takes a commission - typically as much as 5%, though this diminishes as the amount of wagering conducted through the site increases - but if you lose, there is no charge. The thrill of exchange betting is that you are up against hoardes of other wily punters, each trying to out-manoeuvre each other to have their bets accepted, or, to place bets at the best possible odds. And believe me. there are some real bargains to take advantage of for the sharp-minded among you.

Next - Exchange Betting - How To Lay Bets