Sports Betting Definitions

What is a Betting Exchange in Sports Betting?

Betting Exchange Want to bet but not so big on sportsbooks? Consider looking into betting exchanges. Learn more about these exchanges and what they entail today.

✍️ Written by :

Kukhanya Magubane

🗓 Updated :

Aug 23rd 2023

What Are Betting Exchanges?

Betting exchanges are alternative betting markets that allow bettors to wager at lower fees than the sort offered by online sportsbooks. These exchanges also incentivize more direct competition between bettors than traditional sportsbooks. For instance, if you were to use one to bet -6 on the Chicago Bears against the Baltimore Ravens, another bettor could put down +6 siding with the Ravens.

These exchanges may be more accessible financially than traditional sportsbooks, and more accessible from a user standpoint than traditional sportsbooks. Rather than implement American odds, decimal odds, fractional odds, or other common betting odds systems that factor in profitability, betting exchange odds are simply represented by percentages denoting the likelihood of an outcome happening (or not happening).

What else should be known about these exchanges, how do they compare to online sportsbooks, and where and when can you get in on the action? Learn more about the aforementioned three questions (and more) through this thorough, comprehensive guide.

How Do Betting Exchanges Work?

As we’ve gotten at above, betting exchanges are two-way markets, meaning that if you were placing a stake on one side of a wager, then another person has to place a stake on the opposite side of that wager. This can be known as “backing” a proposition (predicting that an event will happen) or “laying” a proposition (predicting that an event will not happen).

Furthermore, these types of wagers require lower overhead costs than those put forth by mainstream sportsbooks. You might only have to put -101 vig on the line for every $100 you want to win, as opposed to the general sportsbook norm of -110 vig, or $110 wagered for every $100 you want to win.

Another perk pertaining to betting exchanges is that they’re not allowed to ban or limit you from enjoying their services. Seldom betting exchange operators limit people from wagering, nor do they cap the upward limit that a person can wager. Moreover, you don’t just have to wager on sports if you don’t want to; political election outcomes, world events, and all sorts of niche things can be up for grabs.

Which Betting Exchange Is The Best?

Unfortunately, betting exchange options in the United States are extremely limited as of right now. This can be primarily attributed to one thing, and that thing is The Federal Wire Act Of 1961, which, until recently completely banned online sports betting.

This law prohibits the transmission of gambling information across state lines, meaning that people who use exchanges in states where they are available can only use them with other bettors who live in that state. By consequence, this means that American exchange betting also has very limited liquidity compared to other sectors of the iGaming industry, and therefore, a very limited betting pool below the one required

Anyone found guilty of violating the above terms can risk facing fines and potentially up to two years’ imprisonment. Consequently, this has created a major hurdle for the industry to advance here in America. Many casino lobbies have also pushed back against this advancement as well, perceiving it as detrimental to the growth of the sportsbook industry.

Even so, more and more options are beginning to open up, with New Jersey leading the way. Some options you can expect to open up American markets in the near future include:

Prophet & Sporttrade: Two new betting exchange platforms slated to hit American sports betting and iGaming markets in early 2022.
Matchbook: An Irish-based sportsbook that also serves American markets.
Smarkets: A London-based betting exchange that prides itself on offering more comprehensive and advanced betting options.
Betfair: One of the oldest and most popular exchange betting websites in the world, Betfair was founded in 2000 and has served the industry for the last two decades, supporting over 4 million customers and staffing over 1800 employees.
BETDAQ: An old-school betting exchange platform that was founded around the same time as Betfair, but didn’t take off to the same extent.

All of the above betting exchange companies have announced intentions to open betting markets in the fall. Additionally, the parent company of Betfair also owns FanDuel Sportsbook, which some experts believe accounts for over half of the American sports betting market share.

When you factor that into consideration, then it’s only a given that the betting exchange market is bound to inevitably grow, expand, and flourish in the coming years as the rest of the online iGaming industry continues to grow.

Betting Exchange Vs. Sportsbook

We’ve touched on how betting exchanges and standard sportsbooks compare, but here’s a more succinct summation of the pros and cons around betting exchanges, and how they compare to conventional sportsbooks:

Betting Exchange Pros

Most betting exchanges are cheaper to wager on than traditional sportsbooks

Betting odds are slightly easier to read than traditional sportsbooks

You can’t be banned from betting or limited from betting

You can bet on more than just sports

Betting Exchange Cons

It’s a very small, niche (albeit growing) subset of the US iGaming industry

Obscure niche sports are very unlikely to be valid betting options

You need another person to place a wager, located in your state

Betting exchanges don’t offer generous bonuses as sportsbooks do

Best US Betting Exchanges

As you can probably ascertain, online betting exchange options are certainly more limited than standard online sportsbook options available here in the United States, which is fairly limited as it stands. Currently, it’s just Washington D.C. and only 14 states which offer legalized online betting in the U.S., a multitude of reputable options like:

DraftKings Sportsbook

888 Sport

Sugarhouse Casino

Fox Bet Sportsbook

BetAmerica Sportsbook

And even though not many exchange betting options have opened up in the United States as of now, you can bet that we’ll be here ready and waiting when they do, and ready to let you know when they do.