Why Everybody Hasn’t Ditched Sportsbooks for Betting Exchanges

Most sports gamblers are used to traditional online bookmakers, which create odds on various outcomes that people can bet on.

In exchange for their services, sportsbooks take a small cut of the action that’s known as “juice” or “vig.” The losing side pays the juice, which is typically around 10% in many cases.

What some gamblers don’t realize, though, is that there’s an interesting alternative to sportsbooks called betting exchanges.

The only difference with a betting exchange and an online casino is that gamblers are matching wagers with one another and the site takes a smaller cut of the action.

These sites also tend to have more favorable odds than standard bookmakers. Given these advantages, why doesn’t everybody just ditch regular sportsbooks for exchanges?

The truth is that there’s more to consider than just the juicy odds and low commissions. I’m going to discuss how exchanges work, their pros and cons, and if they’re as great as they seem.

How Does a Betting Exchange Work?

Exchanges are very similar to sportsbooks in key areas. They operate as betting sites, where gamblers can place wagers on sports, just like a traditional bookmaking site.

Either side can initially set the bet, odds, and price. They merely need another party to agree to the conditions for a valid wager.

Backers are essentially like bettors at regular sportsbooks. The only difference is that they can actually be a market maker, rather than just take what the bookmaker offers them.

Layers act as the bookmaker by agreeing to pay the backer if the outcome is successful. The only difference is that they don’t get to earn juice like a regular sportsbook.

The operator, meanwhile, only takes a small commission as payment for providing the site. These commissions are either taken from the winning side, or split equally between the winner and loser.

You can see how the operator has no part in the actual bet. Their main role is to provide the platform and take a commission from one or both sides after the wager is decided.

What Are the Advantages of Betting Exchanges?

Exchange sites have some big benefits compared to a traditional sportsbook. Here are the main advantages you can look forward to when using them.

Lay Bets

A regular bookmaker only gives you a chance to back an outcome winning. Unlike sportsbooks, you can’t take the opposite side and wager on a team/player losing.

Exchanges are unique, though, in that they provide you this opportunity. You can back or lay bets, with the latter putting you into the bookmaker’s role.

Create Your Own Markets

Another opportunity that exchanges afford you is the ability to make markets. You no longer have to sit back and only take what the sportsbook feeds you.

Instead, you can either lay or back a certain outcome and choose the odds on both. As long as another side agrees to the conditions, then you’re set.

Low Commissions

As covered before, a regular bookmaker takes juice from the losing side of a bet. They effectively always have a built-in profit margin on each proposed wager.

Smarkets only charges the winners a 2% commission. Matchbook is also an industry leader in this area, as they take 1% from the winning and losing side (2% total).

Favorable Odds

Sportsbooks rely on offering skewed odds that give them a nice profit margin. Sports gambling is already hard enough to beat, let alone when you’re not getting the greatest odds.

You can especially find solid prices on long-shot bets. For example, the Dallas Cowboys might have +2200 odds on winning the Super Bowl at an exchange, while most sportsbooks price this event at +2500.

Sharp Money Is Accepted

Odds are that you’re just a casual gambler who’s looking for a little action. But if you’re a highly successful bettor, then you’ll appreciate that sharp money is welcome at exchanges. Sharps are noted professionals who can actually influence odds with their bets.

After all, smaller sportsbooks don’t want to lose big if a well-funded pro places a huge winning bet. Exchanges, on the other hand, aren’t competing against bettors. They’re merely the platform and don’t lose out when sharps win big.

Why Aren’t Betting Exchanges Taking Over Sports Gambling?

You can see that betting exchange sites definitely have some positive aspects going in their favor. So, what’s the catch?

Exchanges have a few downsides that keep them from dominating the sports gambling world. Here are the main drawbacks to using them.

Low Liquidity

You don’t have to fret about liquidity at standard sportsbooks. If the bookmaker is offering odds, then you can wager on the outcome.

You can still find a wide range of opportunities at the biggest exchanges. But across the board, you’ll find more variety at regular sportsbooks.

Weak Promotions

Exchanges may not take big commissions from bets. However, they have to make up for these low fees in some way.

I’d argue that the low commissions trump promotions in the long run. But casual bettors won’t appreciate the promos at exchanges.

Fewer Options

You don’t have to look hard to find an online sportsbook. Literally any Google search involving sports betting will bring about countless results.

Betting exchanges have created a nice niche for themselves, but they’re limited in quantity.

More Complex Than Sportsbooks

You probably had no trouble getting started with your first time using an online sportsbook. Everything is pretty self-explanatory, especially if you already understand the odds beforehand.

Exchanges are wide open, though, because you can be the backer or layer and set odds. Assuming you’re fairly new to sports betting, then I don’t recommend that you start out with an exchange.

Conclusion

Will Betting Exchanges Ever Become a Bigger Force?

Some figureheads in the betting industry predicted that exchanges would eventually come to dominate sports gambling. These predictions have been flat-out wrong so far.

Betting exchanges do serve as a nice alternative to sportsbooks by featuring low commissions and better odds. You don’t lose as much to the operator, thus giving you a stronger chance to win profits.

Another advantage of betting exchanges is that they allow you to lay wagers. This unique opportunity lets you act as the bookmaker by taking the losing side of an outcome.

Additionally, exchanges aren’t the greatest when it comes to promotions. Their low commissions are somewhat offset by the lack of quality promos.

Taking everything into account, betting exchanges aren’t decidedly better than sportsbooks. They offer certain advantages that can make them more appealing, depending upon your tastes.

I recommend exchanges if you hate dealing with big bookmaker margins and are fine with limited or nearly nonexistent promotions.