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| Betting Exchanges |
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| In case you’ve never heard of the term, a betting exchange is a facility that allows bettors to bet against each other rather than against a bookie. In other words, it matches bets offered by two bettors who want opposite sides of a particular bet without adding the typical 10% vigorish that a bookmaker would charge. In effect, it allows you to become the "bookie" by allowing you to offer bets at the odds you want. The exchanges that offer these services typically charge a small fee for this service that equates to about 1.5 to 2.5% per bet. See Understanding "Vig" to understand how to compare these fees to those sportsbooks charge.
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| The obvious advantage to using a betting exchange is that you significantly reduce the fees that a bookie or sports book would charge. Let’s say you are charged an average of 2% fee per bet. Using the example provided in the Sports Betting as an Investment page, your profits from a 55% winning percentage over 100 bets would increase from $1100 to $1640 – an almost 50% increase. So by merely saving a percent or 2 on your betting fees, you can increase your profits significantly.
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| The other advantage to betting via an exchange is that you have the ability to set the price/odds you want, and therefore act as the bookie, so to speak. For Example, let’s say that the for the Jets/Seahawks game, the Jets are offered at -6.5 for a price of -104 (lay $104 to win $100), and the Seahawks are offered at +6.5, also for a price of -104. You have several options if you would like to take a side in this bet, say the Jets -6.5. You can take the bet of Jets -6.5 at -104 to guarantee that your bet is matched. This is still better then taking them at -110 through your neighborhood bookie. However, you may want to try to attain better odds by placing a bet request for the Jets -6.5 at even money. In a sense, what you are doing is offering a bet on the Seahawks +6.5 at even money, thereby outbidding the person who offered the same bet at -104. So anyone who wants to take the Seahawks at even money can do so by accepting or matching your bet. Alternatively, you could offer that same bet at -104 (+104 for you), and hope enough people want action on the Seahawks to take your offer. This is where you, in effect, act as the bookie. The risk is that you will not get an immediate match for your bet (or possibly no match at all), but the reward is that you can win more and lose less for the bets you place.
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| For those who have participated in trading stocks online, a betting exchange works much like a stock exchange. In a betting exchange, you have the opportunity to set the price for a particular side of a bet. You can take the market price, therefore guaranteeing that your bet is placed. Or you can set a limit price, thereby guaranteeing the price/odds you wish, but risking the fact that your bet might not be matched.
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