Peer-to-peer betting is an exciting way to engage with wagering on sports as you battle it out against fellow bettors rather than the sportsbook. Here, we explain all about betting exchanges, what they are and how to use them.
Updated: Jun 4, 2024
The concept of sports betting is familiar to many. You pick a sportsbook, check out the provided betting lines, compare the odds with other sportsbooks, place a bet, and wait for the outcome. If your bet wins, you win according to the odds for your bet and your wager. But what if you could bet against other customers instead of the house?
That’s where betting exchange sites come in. Betting exchanges differ from conventional sportsbooks because they offer peer-to-peer betting (P2P) without the odds being predetermined by the sportsbook or an oddsmaker. Instead, you’re betting directly against other platform users – and the odds can vary greatly when compared to traditional sportsbooks.
Despite some of the advantages they offer, betting exchanges may seem too complex for some bettors, which is why we’ll explain exactly how they work in this article. You’ll learn all about the betting exchanges’ rules and operational terms, their legality in the US, their benefits and shortcomings, and how to determine the best US betting exchanges.
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What Are Betting Exchange Sites
Betting exchange sites are platforms that allow bettors to bet against each other rather than against the sportsbook – which is the case with ‘traditional’ sportsbook operators. Effectively, they’re just the marketplace or the platform where users can both take bets (lay) and place bets (back) on various sporting events and competitions. With betting exchanges, the odds are not set by the bookmaker but the bettors themselves.
They’re P2P platforms, and there are no pre-game or live odds for sporting events. Instead, there are ‘backers’ and ‘layers’ that offer their own prices for specific bets.
For a betting exchange to work, there needs to be a ‘backer’ and a ‘layer’ for every bet. As the name suggests, the backer ‘backs’ a certain outcome on a specific event. For example, let’s say that the Golden State Warriors are playing against the New York Knicks, and the backer backs the Warriors to win.
The layer, or the opposing side, is another bettor that offers odds for the particular outcome, but backs the other outcome – or in our case, for the Knicks to win.
The layer then offers odds for the particular outcome. If, for example, the Warriors are considered the favorites, the layer may offer odds of -200. If the backer accepts these odds and places a wager of $100, and the Warriors win the match, the layer must pay the backer $150 (according to the odds that have been agreed before the bet has been placed). If the Warriors lose the game, the layer keeps the stake.
The main difference to traditional sportsbooks is that the odds are not predetermined, and bettors can often get better odds for the same betting line. The betting exchange platform doesn’t offer any odds, and it only acts as a medium in which bettors can find layers to back some bet or vice versa.
Being P2P, the betting lines might differ depending on the event. For example, some layers may offer better odds for the same event. However, due to the nature of exchange betting, some riskier bets might not be accepted, as there might not be layers willing to offer odds for the particular outcome.
Are Betting Exchanges Legal in the USA?
Even though the 2018 Supreme Court overturn of the Professional and Amateur Sports Protection Act (PASPA) opened up the US online betting market, Internet gaming is strongly regulated by The Wire Act – and that includes betting exchange sites as well. Although it’s legal for companies to host betting exchanges in the US, it’s up to the operators to acquire a valid license from the governing body of the state they intend to operate in. In a nutshell, betting exchange sites are legal in the US as long as they have partnered with a land-based casino or sportsbook operator.
The same rules and principles that apply for traditional sportsbooks are in use when it comes to betting exchanges too. Thus, Prophet Exchange, the first legal peer-to-peer betting exchange in the US partnered up with the Caesars Entertainment group and acquired a license from the New Jersey Division of Gaming Enforcement before its official launch on August 29, 2022.
What this means for bettors is that as long as they choose a legal betting exchange, they can rest assured knowing that the site is fully regulated, overseen, and audited by the respective governing body.
Best US Betting Exchange Sites in 2023
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The betting exchange site market in the US is still in its infancy, with the first operators only launching in mid-2022. However, the market is broadening, and so is the offer for US bettors. In addition, we’ll present you with the best betting exchange sites you can engage in today.
Prophet Exchange
Prophet is the first legal betting exchange site to launch in the US. The operator partnered up with Caesar’s Entertainment to acquire a license from the New Jersey Division of Gaming Enforcement and officially launched in the Garden State on August 29, 2022 – just ahead of the football season. Although Prophet has already acquired a license in Indiana, the operator hasn’t officially launched in any other state but New Jersey at the moment.
Being the first legal betting exchange, Prophet is also the largest platform with over $37 million in total traded or exchanged. Liquidity is one of the most important factors when choosing a betting exchange site, and it’s one of Prophet’s strongest points. The commission is just 2%, which is substantially lower than the juice many online bookmakers take.
There are plenty of betting markets and many options to choose from, which makes it a viable option for various niche sports besides the standard NFL, NBA, MLB, NHL, and NCAA markets. Depending on the availability of sporting events, there are hundreds of markets available on the platform.
New users at Prophet are welcomed with a No Sweat First Bet of up to $100 for their first matched wager. Besides the welcome bonus, there are various ongoing promotions for regulars, such as boosted odds and a VIP program.
ZenSports Exchange
ZenSports is among the most famous sports betting exchange sites in Europe, and it had its official launch in the US on June 13, 2023. The platform is only available in Tennessee at the moment, but the operator promises to launch in more jurisdictions in the future.
It works as a decentralized P2P betting site that offers both traditional and exchange betting. Users can find pre-made odds for point spreads, moneyline, over/under, futures, and prop bets, but they can also create any bet they want or back a layer’s bet through the ZenSports platform.
Notably, the platform is currently only available through the mobile app, which is available for iOS and Android users and can be downloaded from the iOS App Store for iOS users or the ZenSports website for Android users.
The welcome bonus consists of a 5% cashback on every bet a user makes during the first 15 days after registration. If the user uses the referral code, the maximum cashback amount is unlimited. Without a referral code, the maximum bonus amount is $250.
Sporttrade Exchange
Sporttrade Betting Exchange is Prophet’s biggest competitor, but it operates differently. Instead of mimicking a traditional sportsbook, Sporttrade operates as a sport trading platform. Think of it as a stock exchange platform, but instead of trading stocks, you’re trading sports bets.
Although Sporttrade also has a commission of 2% on winning wagers, there are some big differences when compared to traditional sports betting. Betting on this platform looks more like day trading, with each betting line costing differently. The cost implies the probability, and it works as a moneyline. For example, if the Warriors are priced at $68, it means that they are favored 68% to 32% to win against the Knicks. Translated to American odds, the traditional moneyline odds would be -200. The stocks are available 24 hours before the game starts, with a pre-determined initial price. However, they can fluctuate before the start of the match, and during the game – thus mimicking live betting.
Compared to other P2P betting platforms, Sporttrade has a network of market-makers who offer these bets. The company claims that 95% of all the trades on the platform are between a market-maker and a user rather than a user-user. The market makers are in place to supply liquidity to the platform and make sure that users can find various bets at all times.
Sporttrade is only available in New Jersey at the moment and is fully licensed by the NJDGE. It’s available through the web and the iOS and Android mobile apps. New users are welcomed with a Money-back first bet that offers a refund of up to $100 if the users’ first bet ends up in a loss.
How Betting Exchanges Work
Betting exchanges are online platforms that provide peer-to-peer betting in which users can both back and lay a back. Backing a bet means to bet on an outcome to happen – similarly to placing a bet on any traditional sportsbook. Laying a bet means to bet against an outcome to happen. Essentially, betting exchanges are marketplaces where users can set their own odds and potentially get better value for their wagers when compared to traditional sportsbooks.
Back Bets
To back a bet means to bet that your team will win. It’s the simplest form of sports betting, and it’s how bets at traditional sportsbooks work. However, the difference here is that the odds are not provided by the bookmaker, but by another user.
Even though three-way betting scenarios are possible on the betting exchange market, we’ll stick to traditional moneyline bets for our example. Let’s say that you think that Novak Djokovic will win the Cincinnati Master’s final against Carlos Alcaraz. You can find a layer that thinks the opposite, and they have provided odds for this outcome.
The odds may be +150 for Djokovic to win. If you decide to back Djokovic with $50, and he wins the match, you’ll receive $125 from the layer and make a profit of $75. Keep in mind that you’ll have to pay the platform’s commission. However, the best betting exchanges in the US usually have a commission of just 2% – and you only pay commission on the winnings. So, you’ll only pay $1.5 in commission and receive $123.5, or $73.5 in profit. If Djokovic loses the match, you lose your wager.
Lay Bets
Laying bets is a feature that’s unique to betting exchanges. When you lay a bet, you essentially act as the sportsbook. You can offer your own odds for an event not to happen. For example, you can lay a bet and offer odds for the Chargers to win against the 49ers. Considering that the 49ers are heavy favorites in the matchup, you can set the odds at +300 for the 49ers to lose.
If a backer decides to back that bet and wager $100, the betting exchange is on. Then, if the 49ers win, you keep the $100 from the other user (minus the commission fee). If the 49ers lose, however, you’ll have to pay $400 to the other user.
Different betting exchanges offer different perks, such as bonuses and cashback, but for a P2P betting exchange to work, there must be two sides willing to place a bet on opposing outcomes.
Bet Trading
Although the term bet trading is often considered synonymous with sports trading or matched betting, there’s a slight difference. Namely, some betting exchanges act as stock exchanges or day trading platforms and allow users to buy and sell bets like stocks.
For example, a market-maker (or a layer) can offer a bet with pre-determined odds, and a user can buy that bet. Then, the odds may fluctuate, but the user that bought the bet (often called a contract) can sell it to another user. The concept is similar to stock trading, where traders seek to profit from price fluctuations.
Benefits of Betting Exchanges Over Sportsbooks
Betting exchanges have several advantages over traditional sportsbooks that make them a viable option.
More competitive odds
This is the primary reason why some users are opting for a betting exchange instead of a conventional sportsbook. The nature of P2P betting allows users to shop for better odds than they would receive at a standard sportsbook. The odds can fluctuate depending on the matchup, and the supply and demand for a given bet often determine the odds.
The odds are often more competitive even with the commission included, and they can be especially lucrative if you’re the layer or if you’re backing the underdog. Also, you might get a better spread when compared to a sportsbook. For example, if the point spread for a given NBA matchup is 7.5 at most traditional sportsbooks, you can get the same odds at a betting exchange, but with a different point spread margin that might favor you more.
Low commission fees
The business of traditional sportsbook is in the ‘juice’, or the cut they take from every bet that has been placed on their platform. This is most obvious in point spreads or other even-money bets, where the odds are -110 instead – meaning that the sportsbook takes a cut of 10%.
This is the case for all bets on traditional sportsbooks, and one of the biggest advantages of betting exchange sites is the low commission fees. They’re usually just 2% on the winnings, which is considerably lower than the 10% ‘juice’ that most sportsbooks take.
No Limits on Betting
Due to the nature of P2P betting, there are no limits on the types of bets you can make. This is the case for the size of the bet too. As long as both sides agree, you can bet on anything and as much as you want. Betting exchange sites usually don’t have any limits on the size of the bets either.
Depending on the available liquidity, there’s no limit on the betting opportunities at these platforms – even with live betting. For example, you can lay that Djokovic will lose the next gem, or that Curry won’t hit a 3-pointer until the end of the game. As long as there’s someone to back or lay a particular bet, the bet is on.
Where They Fall Short
Despite the many advantages they provide over traditional sportsbooks, there are several areas where betting exchanges fall short.
Liquidity and Market Depth
The key downside of betting exchanges is liquidity – or lack thereof. The term refers to all the money that is transacting on the site, which translates to bet availability. High liquidity exchanges have many users, resulting in a wide variety of bets and more competitive odds.
On the other hand, low-liquid betting exchanges mean a smaller betting pool and limited options for bets.
The odds on low-liquid sites also tend to be worse, or there may be too few bettors for you to match. That’s why checking the market liquidity is crucial when choosing a betting exchange site.
No Parlay Bets
Although some exchanges make it possible to place a parlay bet, it’s usually not the case. Even if the option is available, it’s usually a parlay that’s been laid by the layer and you can choose to back it or not. In comparison to traditional sportsbooks, where you can combine multiple-leg bets in a single parlay, that’s not the case with these sites.
Variable Odds
The odds at betting exchanges are more volatile when compared to traditional sportsbooks. While fixed-odds betting is possible, the odds often change rapidly due to market fluctuations, which may lead to unexpected outcomes for bettors and worse odds.
Tips & Strategies for Exchange Betting
As similar as it is to traditional sports betting, there are some key betting exchange trading tips and strategies that you can utilize to maximize the potential. First, you should familiarize yourself with the concept. These sites are often more complex when compared to traditional sportsbooks, so there’s a learning curve that you’ll need to pass before you start.
Next, you should check if the site you want to register at is licensed and regulated. Once you make sure that the site is legal and you’re allowed to use it from your state, you should check the site’s liquidity. The information is often presented on the main page of the website or the app, but you can also look for the bet types and sports you’re interested in yourself. You should have a glance at how many betting exchanges there are, and if the odds are competitive.
You should also check the commission that the site charges and compare the odds with traditional sportsbooks with the commission included. Once you get accustomed to the exchange, you can start by comparing the odds for the particular market with a conventional sportsbook, and either back or lay a bet with better odds than you would otherwise get. You can also practice matched betting, which may involve using the bonuses and promotions provided by the platform.
A New Way to Bet Online?
The concept of a betting exchange is nothing new. The first platform to offer P2P betting was Betfair Exchange, which started in 2000 and is still the largest betting exchange in the world. Although it still hasn’t acquired a US license, there are already several platforms like Betfair that operate legally in the US.
For a betting exchange to work like intended, there need to be as many users as possible – which is the real challenge. The liquidity of the platform determines whether it will survive the test of time or not. However, the two largest platforms at the moment, Prophet and Sporttrade, have been enjoying great success in their first year of operating in New Jersey, with Prophet already counting over $37 million of total money traded on exchange.
Although US bettors are still largely unfamiliar with exchange betting, the number of users on these platforms is on the rise. Despite the liquidity and learning curve obstacles, which are natural for this type of business, the market is expected to grow and enjoy great success in the US.