What Is a Betting Exchange?

A betting exchange differs from the traditional sportsbook in that it is a market where bettors are able to wager against one another.

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Bettors at a sportsbook are betting against the house. In a betting exchange, two bettors come together with one on one side of a bet and the other bettor on the other side of the bet.

To see how this works, we can take a look at an example.

Bets on a Betting Exchange

Here is how it works on a betting exchange. One bettor offers a $50 bet on the Steelers -3 against the Browns. Another bettor on the exchange accepts that offer and takes the Browns +3.

The beauty of making the bet is that the exchange doesn’t charge the typical 5 to 10 percent to take the wager. Bettors can find all kinds of bets at closer to -101 and often at even money.

Betting exchanges have low overhead. They don’t need to spend on oddsmakers, so they can pass on the savings to the bettor.

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U.S. Betting Exchanges

Currently, there are no betting exchanges in the U.S. In 2022, there are two that are going to give it a shot in the state of New Jersey.

If they are successful, it may open the door to more in the U.S. The big problem is going to be liquidity. The Federal Wire Act of 1961 prohibits the transmission of gambling information across state lines.

What that means is that bettors in New Jersey can only accept bets on an exchange from other bettors in New Jersey. That could be a problem as the pool of money available is limited to bettors in New Jersey.

The casino lobby in the U.S. does not want to see the Wire Act overturned for fear that they will lose customers from their traditional sportsbooks. It remains to be seen if a betting exchange can survive in the U.S.

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Why Betting Exchanges

There are a number of advantages to betting exchanges. The biggest may be the lower fees. Since bets are done in a peer-to-peer fashion, there is no sportsbook that needs to be paid. Bettors pay a few cents on the dollar for each wager.

There are bets at traditional sportsbooks that only offer one side. At a betting exchange, every wager is a two-way street. There has to be a bettor on each side of the bet to make it work.

Betting exchanges are great for big-time bettors and professionals. Bettors can’t be banned or even limited like they can be at a traditional sportsbook. Bettors just have to find someone to take the other side of their bet.

What bettors won’t find at an exchange are the bonuses that are typically found at sportsbooks. Because of the savings at an exchange, bonuses aren’t really needed as a selling point.

The other thing that can be an issue at a betting exchange is that you might not find someone to take the other side of a bet. That may occur especially in smaller market sports.

Read more betting guides, including what is a handicapper in betting and what is a unit in betting.