What Is A Betting Exchange?

A betting exchange is a marketplace where bettors can browse through wagers that people offer or post their own in hopes of attracting some interest in selling it.

Part of the attractiveness of the exchange concept is that more control is in the hands of bettors. Users set their own odds and terms, while the exchange takes a small fee for helping to facilitate the bet, just like a sportsbook would charge vig.

What is peer-to-peer betting?

Peer-to-peer betting simply refers to a bet between two individuals. If you find a match on a betting exchange and ultimately place a bet, then you’re betting against a peer.

In other markets, exchange bettors can also be referred to as backers and layers. The former refers to the bettor who thinks that an outcome will happen, while the latter is taking the opposite stance.

Outside of the exchange marketplace, a peer-to-peer bet could simply refer to a wager between two friends or acquaintances. When it’s a peer-to-peer bet, there’s no oddsmaker or bookmaker involved, as the two sides agree to their own terms and odds.

Differences between betting exchange and sportsbook

With a mobile sports betting app, bettors can place their bets on any available wagers, albeit at the odds and terms that the house sets. On a betting exchange, you set your own conditions for the bet. For example, a sportsbook might set the following NFL line for an upcoming game:

This identifies the Chargers as the favorites, and while you may agree with that, maybe you don’t like the size of the spread. For an alternative, you could post the following bet on an exchange to see if you get any takers.

If you get a match, both sides will put up their agreed-upon stake. Once the game ends, the winner gets most of the money, and the exchange takes its fee for helping to facilitate the bet.

Meanwhile, you would have to compare lines at multiple books to find something closer to your liking, aka line shopping. There’s no guarantee that you’ll be able to find it, but the same holds true when betting on an exchange. The bet only happens when there’s a match.

Are there betting exchanges in North America?  

Not yet, but a pair of options could be available soon. While it’s unclear what the exact demand for betting exchanges will be in the US, there’s optimism that the concept could find a home.

Betting exchanges share similar characteristics to financial trading markets. Since people already are interested in trading equities, crypto, and other financial instruments, the concept has the potential to translate well.

However, there is a potential trouble spot in the US with Wire Act limitations. Bettors from one state might not be able to match up with those from other states, which could severely limit the potential liquidity of the market as a whole.

North of the border, the Canada sports betting market continues to evolve. Legal single-game wagering options have started rolling out in select areas. Betting exchanges aren’t available there just yet either, but they could be in the future.

Betting exchange pros and cons

Betting exchanges are an intriguing concept for several reasons, including the fact that bettors get more of a say in what to wager on and how. On the other hand, it’s not all positive when it comes to using an exchange. Here are some of the top arguments for and against betting exchanges:

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Pros

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Cons

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If legal betting exchanges become available in specific states, it might be worth checking them out to see if the concept works for you and your approach to betting. Ultimately, the market as a whole will decide on the popularity of the concept.

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