JUMP TO:
- What is a betting exchange?
- How traditional sportsbooks operate
- Liquidity Explained: Why it matters for bettors
- Pricing and odds differences between exchanges and sportsbooks
- Pros and cons of betting exchanges
- Pros and cons of traditional sportsbooks
- Which option is better for different types of bettors?
As sports betting continues to rise in popularity, the ways in which we can engage in betting continue to expand. Two of the most popular mediums of sports betting, sportsbooks and betting exchanges, have their own respective pros and cons.
Sportsbooks remain the traditional and most popular North American model on the sports betting market. Betting exchanges, however, have become popular in the U.K. And have started to slowly migrate into the United States.
Let’s examine the key differences between these two models of sports betting, then analyze the unique pros and cons of betting exchanges and sportsbooks for U.S. Bettors.
What is a betting exchange?
A betting exchange is an open marketplace connecting bettors who want to wager on each side of a game.
Rather than taking bets and setting odds like traditional sportsbooks, exchanges provide a platform where bettors can wager against each other on a peer-to-peer basis. The exchange collects commissions on winnings as revenue.
MORE: Betting terms glossary
How traditional sportsbooks operate
Sportsbooks are the traditional model of sports betting that dominates the North American market. They take bets and set odds on sporting events, and bettors place their wagers with the sportsbook.
Sportsbooks, unlike betting exchanges:
- Set the odds on sporting events and take bets from bettors
- Offer a wide range of sports to bet on and markets to play
- Offer bonuses and promotions to attract and retain customers.
Read more on how sportsbooks set betting lines.
Liquidity Explained: Why it matters for bettors
In sports betting, liquidity means the total amount of money available to be wagered on a particular betting market.
The higher the liquidity, the more efficiently the market operates, and the easier it is for bettors to make bets quickly and at competitive odds.
- Sportsbooks carry a high-liquidity model. They involve a vast number of bettors wagering against the house.
- Betting exchanges are low-liquidity markets. Bettors are placing wagers directly against one another, and potential action is always dependent on a willing and able second party.
Pricing and odds differences between exchanges and sportsbooks
On betting exchanges, bettors set odds and then wager against other bettors. On sportsbooks, oddsmakers on the books set the lines and then bettors wager against the book.
What makes exchanges' odds more competitive than traditional books?
They're a low-margin, high-volume model. They're not trying to get 50% of bettors on each side of a bet so they can guarantee a profit to the house through the vig.
That means lower fees but also lack of liquidity and no promos, boosts or special offers like bettors enjoy at most sportsbooks.
MORE: What is a betting unit? | Bankroll management
Pros and cons of betting exchanges
Pros
Lower fees: Because exchanges involve peer-to-peer betting, there are no sportsbooks to take their cuts. You'll be paying a few cents per dollar as the winning bettor instead of the standard 10 cents to sportsbooks.
Customer-friendly: Exchanges offer a fair and no-nonsense betting experience. Bettors set their own odds and bet against each other. What you see is what you get.
No limits: Every sharp bettor has been limited at a traditional sportsbook. Exchanges won't do that to a pro bettor. If you have a fellow bettor willing to take the other side of your bet, you will have action without limits because the exchange will make its small commission whether you win or your opponent wins.
Cons
Lack of liquidity: Bettors on exchanges can experience liquidity issues, meaning it’s not always easy to get your money down on a bet. With books, by contrast, you can basically get any bet in at any amount unless you're limited.
No promotions: Exchanges tend to be much more basic than sportsbooks, without any real promos, bonuses, sign-up specials, odds boosts, or discount deals.
Manipulation: Safeguards for manipulation are another worry for betting exchanges. Sportsbooks are much more regulated, and the teams setting lines are licensed members of the sportsbooks.
Pros and cons of traditional sportsbooks
Pros
Convenience: Sportsbooks are quite simple to join and use, and most offer a wide range of sports to bet on and markets to play.
User-friendly: Sportsbooks offer an easy, navigable user interface, making them more ideal for novice betters than more complex betting exchange systems.
Liquidity: Sportsbook operators have a vast pool of registered users, so there's always liquidity available for most bets.
Parlays: Sportsbooks allow customers to place parlays and same game parlays, bets that combine multiple outcomes into a single wager. Betting exchanges do not typically offer these options. Player prop bets can be easier to execute on books, too.
Promos: Users of sportsbooks will often find more avenues for bonus bets, odds boosts, and other promotions that can offer ways to expand your bankroll.
Cons
Higher fees: Sportsbooks take a larger cut of the winnings than exchanges, as they rely a lot on the juice or vig to guarantee profits.
Limited options: Sportsbooks set the odds on sporting events, which means there tends to be far less flexibility for bettors.
Which option is better for different types of bettors?
Every person is different -- and so is every bettor. The choice between sportsbooks and betting exchanges will ultimately come down to a matter of personal preference.
Sportsbooks offer simplicity and bonuses for new and novice bettors.
Betting exchanges, meanwhile, offer more control and flexibility over the betting process for those more familiar with betting.
If you're just getting started, you might want to join a standard book, then build up to joining a betting exchange as you gain more experience.
Follow our sports betting checklist before starting your journey.