The American Exchange
We’re less than 1 year separated from the landmark Supreme Court case that brought down PASPA, a law that prohibited sports wagering outside of Nevada. Since then multiple states have legalized sports betting, and operators have set up shop here in the US. Every operator offers the sportsbook model, where the bettor is pitted against the bookmaker. Another popular form of betting that doesn’t yet exist in the US is exchange wagering.
In this post, we’ll explore exchange wagering; how it’s different than a sportsbook, and its various advantages over traditional betting.
What is Exchange Wagering?
Simply put, exchange wagering is a form of betting where the bookmaker (“bookie”) is removed, and bettors are matched with one another. Instead of betting against the bookie, when you place a bet on an exchange you’re matched against one or more bettors on the opposite side of your bet.
As a quick example, if you place a bet on an exchange on the Rockets to win the NBA Championship, you’re matched with a bettor who’s betting against the Rockets 🚀 . (That’s right, you can bet directly against outcomes on an exchange. More on that below.)
On an exchange, there is no bookmaker. Prices on the platform are determined by wisdom of the crowds, which almost always means better odds for you.
What are the advantages of Exchange Wagering?
1. Better Odds (You save 💰 )
When you bet at a Sportsbook like William Hill or Draftkings, you’re betting against a bookie, so the odds offered are often quite poor. How poor? Bookies build in up to a 10% margin in their odds, which cuts into your ability to make money. When you bet on an exchange like Sporttrade, the commission you pay is drastically less.
On Sporttrade, the commission taken on the total amount wagered amounts to less than 1%, about one twentieth of what bookies can charge.
2. The Ability to Bet On and Against Outcomes
Have you ever looked at a futures market and wondered why you’re not able to bet against any of the outcomes? The answer is simple; bookies make much more money by only allowing you to bet on outcomes, not against them.
On an exchange, you’re free to bet on and against any outcome. Take the Raptors in the NBA Outright market, for example. The market is offering -700, which means your bet of $70 against the Raptors will return you $80 if the Raptors don’t win the NBA Championship, a potential profit of $10.
The important thing to remember is that by allowing you to directly bet against outcomes, exchange wagering gives you much more optionality than betting with a bookie.
3. Cash Out (At a fair price)
Many bookmakers in NJ give you the option to “Cash Out” of a bet early. The problem with their cash out feature is that they will regularly add an additional margin on top of the cash out offer, making it an inefficient option if you’re looking to hedge your position.
Meanwhile, on an exchange, the odds are set by the market. This ensures you’re able to cash out for a fair market value without any additional margin added on by the sportsbook. More dollars in your pocket.
Giving you the ability to cash out of any position at the fair market price opens up an entirely new form of betting called trading. Instead of placing a bet and waiting for the outcome, you’ll be able to place your money on a position and can lock in a profit or loss as soon as the odds change.
4. Price Flexibility
If a bookie offers you odds that you don’t like, there’s nothing you can do. With an exchange, you have the option to ask for a better price.
For example, if the market is offering you -139 on the 76ers to beat the Nets, and you’d like to bet $100 on the 76ers at -130, you’d simply enter your desired odds and bet amount, and submit the offer. If the odds on the 76ers drift a bit, your offer will be matched by another bettor on the exchange, and you’ll have your bet. While your offer sits in the market, you’re able to cancel it at anytime.
Have you ever placed a bet during a game, only to be stuck waiting up to a minute to see if your bet was placed? Worse yet, have any of your bets been denied or limited?
Most bets that are placed with a bookmaker go through an “approval process”. During that time, the bookmaker assesses your player profile, checks the latest odds, then gets to decide how much, if any, of your bet will be accepted.
Placing bets on a betting exchange is a much more transparent process. When your bet is submitted, you’re matched with one or more bettors on the other side of your bet. There’s no approval process, which means faster betting.
6. Winners Are Welcome, Not Limited
It seems we have a real issue with this here in the US. Bookies attract players with the allure of winning, yet if you’ve ever won a few bets in a row or even beaten the closing line, you’re considered bad for business and are limited or banned.
This is a key difference between an exchange and a bookmaker. A bookmaker can only win when you lose. An exchange, on the other hand, takes only a slim commission for brokering each bet between players. So whereas a bookmaker depends on beating players, an exchange is incentivized by maximizing volume, regardless of who wins or loses. In the end, exchange betting is a much fairer and more cost-efficient way to bet.
On a platform like Sporttrade, the experience is much more engaging as well. With the option to choose which odds you’d like to see displayed, you’ll know that you’re getting an experience that’s customized for how you like to bet. Once you place your bets, we’ll show you the market value of each bet in real-time, so you’ll know your profit or loss on each bet and can cash out anytime.