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What is the difference between matched and unmatched bets?

A ‘matched’ bet is an offer to make a bet by a Betfair customer which has been accepted by another party. An ‘unmatched’ bet is an offer to make a bet which (unless and until it cancelled) is available for acceptance by another party. The other party who can accept an offer by a Betfair customer to bet (and so convert an unmatched bet into a matched bet) will either be another Betfair punter (if the offer is made through the UK exchange) or otherwise will be Betfair.