A betting exchange differs from the traditional in that it connects bettors wishing to find the best price on odds available in the marketplace.
Back in 1999, the Betfair Exchange launched in the UK and paraded a dead bookie around the streets of London as a marketing stunt.
Betfair, and many in the industry, were convinced that the betting exchange concept would mean the end of sportsbooks, as the prices offered on betting exchanges are almost always better. But that didn't quite happen, as Betfair didn't anticipate that most sports bettors at the time just didn't care about price.
It sounds crazy, but it's all true.
Since the advent of those early betting exchanges, numerous companies have attempted to innovate on the classic Betfair model but it wasn't until very recently that a truly differentiated exchange-enabled experience arrived with the right mix of price, speed, liquidity, instant in-play, and frictionless ease-of-use with a wide and growing selection of bets that meets the expectations of the modern consumer.
But first, let's define an exchange:
You might be pretty familiar with the concept of an exchange if you trade stocks or crypto, buy and sell items on Ebay or StockX, or even video games like World of Warcraft. Simply put, in a stock exchange securities are bought and sold in a marketplace in an efficient, transparent, and orderly manner.
In the context of sports betting, an exchange gives users the freedom to bet at the best price established by existing offers in the marketplace, or enter a custom price (odds) on either side of an outcome (Yes or No, Over or Under, etc).
The transparency and active competition enabled by this exchange model allows a user to get better odds on their bets. The betting exchange itself charges a commission on each market players bet on, and this commission tends to be far cheaper in comparison to the VIG factored into bets on traditional online sportsbooks.
Do transparent betting markets and cheaper prices on the same bet sound like enough of a pitch to try and get you to use an exchange? Historically, users of the earliest exchanges didn't think so. That's why today's newest betting exchanges are offering much more mature and innovative products, giving a truly enhanced experience than traditional sportsbooks in many areas.
How do Sports Betting exchanges benefit you?
Instant In-Play Betting
The future of sports betting is in-play betting, meaning, betting on outcomes once the game has started. On some betting exchanges in the US, like Sporttrade, your bet can be instantly accepted without the "spinny wheel". Instant bet acceptance removes the friction of having your bet rejected and odds move against you.
Traditional sportsbook models make trading the flow of a game an expensive affair as the VIG on every bet ensures that your potential profits shrink each bet. In an exchange model, you can bet every play of the game if you'd like at little to no cost, with only small commissions taken on profit.
A simpler UI
For most people new to sports betting, the traditional layout and navigation of a sportsbook can be overwhelming and confusing. Some betting exchanges offer a sleeker, more intuitive design, including the ability to see prices in % odds alongside American odds.
% odds are simply percentages. Buying at 52% odds means $52 returns $100, buying at 10% odds means $10 returns $100.
This slight differentiation can be very helpful to newer bettors who have had reservations with sports betting stemming from a difficulty understanding American odds.
Ability to place big bets at consistently boosted odds
For those of you who are experienced sports bettors, you likely have experienced a time where you wanted to place more on a bet, but the sportsbook limited you to a smaller amount. On an exchange, a player can't be limited in the amount they'd like to wager.
Of course, there must be liquidity available for your bet to be instantly matched, and modern exchanges like Sporttrade can guarantee a combination of price and size that not even the biggest sportsbooks can offer.
Exchanges can even accept wagers above $100,000 at crazy good odds.
In time, it's not unreasonable to expect that every large wager we see reported at a Sportsbook will end up being captured by the betting exchanges. The reason is simple; customers can bet upwards of $1m on liquid markets at prices closer to -104 (51% odds) than -110 (52.4% odds).
For events like futures or golf outright markets, you can expect to see every bet offered at upwards of a 40% odds boost.
Your bets always have a liquid value
Today's most innovative betting exchanges focus on creating an exciting in-play (during the game itself) experience for customers. Successful exchanges have enough in-play liquidity that the value of your bets will update in real-time. An example:
You place a $50 bet at 50% odds on the Philadelphia Eagles Moneyline on a betting exchange. You're betting $50 to return $100 (original $50 stake + $50 of potential profit) that the Eagles win. On the first play of the game, the Eagles gain 40 yards and are in their opponents territory. Instantly, the Eagles to Win odds have shifted to 58%, so your $50 bet is worth $58.
On the next play, Jalen Hurts is sacked, and the odds fall to 55%. At any time, you can sell your bet at the current market value.
Now imagine you've placed five different bets on the early slate of NFL games. Today's most innovative betting exchanges, like Sporttrade, will show you the constantly updating value of your "portfolio" of bets, very similar to viewing a stock portfolio, so you can see if you're in the green or red at a glance.
An increasingly wider selection of markets
Historically, betting exchanges have struggled to offer some of the less liquid things like game, team, and player props. This is changing, and new betting exchanges are increasingly offering a wider selection of options for users, with the same exciting features offered for main markets such as spreads, totals, moneylines, futures, etc.
Imagine buying Josh Allen 400+ passing yards at 20% odds, and then seeing the odds shoot to 50% when he passes for 150 yards in the first quarter!
Where will exchanges continue to innovate?
Increase support for parlays
A parlay allows you to combine numerous outcomes together, making the payout much greater as each "leg" must win in order for your bet to pay out. This feature doesn't exist yet on any regulated betting exchanges, although that will at some point change.
There you have it, an exhaustive primer on the modern iteration of a sports betting exchange. With more than 20 years between the first and latest sports betting exchanges, the modern consumer is finally able to benefit from the full promise of what a modern betting exchange like Sporttrade can offer.
Do you think you could benefit from the many advantages of a sports betting exchange? We've partnered with the premier US-operated sports betting experience, Sporttrade, for an exclusive offer …
This article is part of our Betting Promotions series.
