There are two fundamentally different ways to bet on a race: against a bookmaker (the house sets the odds) or on a betting exchange (you bet against other punters). They price the same race differently, and the difference matters for measuring value.
How a bookmaker works
A bookmaker offers you fixed odds and profits from the overround — the margin built into their prices. They can restrict or close winning accounts, and they run promotions (like extra places) to attract custom.
How an exchange works
On an exchange you bet peer-to-peer: you can back (bet for) or lay (bet against) a horse, and the exchange takes a commission on winnings instead of an overround. Prices are set purely by supply and demand between bettors, which tends to make them sharp and close to true.
Why exchanges matter for value
Because exchange prices are so market-driven, the Betfair Starting Price (BSP) — the exchange's price at the off — is a widely trusted benchmark for the "true" closing line. It's a cleaner yardstick than the official SP for judging whether a bet had value, which is why CLV is often measured against it. (See the glossary for SP and BSP.)
Which should you use?
- Bookmakers for early prices, concessions and promotions (e.g. extra places).
- Exchanges for sharp prices, laying, and a clean read on value.
Most disciplined bettors use both. Whatever you use, the test doesn't change: did the price you took beat the close?