What is a Betting Exchange?

The push for legal single-game wagering in Canada continues. Significant progress has been made recently, so it actually could receive a green light before too long. Notably, Ontario would be the most likely province for the initial launch.

The introduction of single-game wagering would really shake up the landscape on its own. However, there’s another facet of sports betting also under consideration for the Canadian online gambling market.

Betting exchanges are popular options in overseas markets, and the concept could be hitting our shores before too long. So what is it, and how does it work? Read on as we explore everything you need to know about betting exchanges.

What’s a betting exchange?

Betting exchanges provide a setting for bettors to come together and place bets against one another. The exchange is the facilitator of the wager and charges a small fee for doing so. It also provides a marketplace for bettors to scout opportunities and post their own wagers in hopes of attracting opponents.

In a nutshell, a pair of bettors can agree on the stakes and odds for a specific wager, such as a moneyline bet on an upcoming NHL game or a point spread wager on a CFL contest. Once the wager has been accepted, the bet is essentially placed and will be settled at the agreed upon terms upon completion.

Exchanges let bettors set the terms and odds, so more control is in the hands of participants. Normally, when you’re betting at a sportsbook or with Ontario Lottery and Gamings Proline, the wager parameters are set by the oddsmakers. For affording you that freedom, the exchange charges a commission, whereas a sportsbook charges vigorish on all bets.

Are betting exchanges available in Canada? 

Not as of yet, but they are under consideration as part of the overall effort to further legalize sports betting in Ontario. In a government discussion paper entitled “A Model for Internet Gaming in Ontario,” there’s a dedicated section on the topic that includes the following passage:

Well-established peer-to-peer games and offerings, such as poker, would be permitted in Ontario’s iGaming market. The Province welcomes feedback on whether less traditional offerings, such as peer-to-peer sports betting through a betting exchange (subject to the legalization of single-event sports wagering), have been a popular offering in other jurisdictions. Unlike traditional sports betting, where bettors place wagers against established bookmakers, betting exchanges allow bettors to effectively become bookmakers themselves and place or accept wagers from other bettors. Please be advised that such less traditional offerings may not be consistent with the Criminal Code.

In short, betting exchanges could be on the docket once single-game wagering is sorted out. While there are no guarantees that it will come to pass, it’s encouraging possibilities under discussion for the Ontario iGaming market.

How peer-to-peer betting works

Thanks to betting exchanges, individual bettors can square off against each other on a one-to-one basis. This is also known as peer-to-peer betting, similar to how two players could engage in a head-to-head poker match.

On the exchange, bettors can list the game on which they want to wager, plus the stakes and odds they’re willing to accept. For example, a bettor may list the Toronto Raptors at -2.5 points for an upcoming NBA game against the Milwaukee Bucks at $50.

If they find a taker, both sides will be on the hook for $50 bets. The winner gets the pot with the exchange, keeping a small commission for facilitating the bet. Ultimately, the betting exchange offers more of a personal and social experience in comparison to standard wagering.

What’s the difference between a betting exchange and a sportsbook?

At an exchange, bettors have more control over the terms of the wager. Sportsbooks provide plenty of different wagering opportunities for users, but the bottom line is that those who wish to bet will have to accept the listed odds if they want to move forward.

On an exchange, by contrast, you can list a bet more to your liking. If we go back to our Raptors example, a sportsbook may have the game listed with Toronto as a 3.5-point favourite. If that’s too big of a spread for your taste, you can list it at 2.5 points on the exchange.

Of course, there’s no guarantee you’ll find a taker at those terms, but it at least opens the possibilities. Additionally, exchanges offer up even more chances for bettors to spread out the risk by hedging their positions or by covering more bases with the odds for the bet.

What sports are available on betting exchanges?

As with sportsbooks, the most popular options at exchanges revolve around the major team-based sports. If there’s a game on tap that you can easily find on the tube, then there’s a good chance you’ll find it available at the exchange.

In addition, you can also add a listing for the bets that you want. Among the more popular items on the exchange menu are:

You may also find options for the major international soccer leagues, as well as top individual sports such as golf, tennis and MMA. Add it all up, and you’ll have plenty of different possibilities to explore at betting exchanges.

Betting exchange examples

To further understand how betting exchanges work, here’s a pair of educational examples. For starters, let’s say you examine an upcoming NFL betting slate at a sportsbook. You come across the following point spread for a game that really piques your interest.

  • Seattle Seahawks +4.5
  • Buffalo Bills -4.5

At the book, the Bills are 4.5-point home favourites over the Seahawks. While you like the Bills to win, the size of the spread has you feeling a little skittish. You can certainly wait for a line to move in your favour and shop around to compare prices, but you can also take the step of listing it on an exchange at your desired spread. Let’s say:

  • Seattle Seahawks +3
  • Buffalo Bills -3

You’re willing to lay a field goal on the Bills at $100. If you find a taker on the exchange, your opponent will be in for $100 on the Seahawks +3. Once the game is final, the wager will be settled with the winner getting the proceeds, minus the commission charged by the exchange.

Next, let’s say there’s a slate of CFL games on tap. You go through the same process and find yourself intrigued by the following game listing.

  • Ottawa Redblacks +2.5
  • Toronto Argonauts -2.5

As you see it, the Redblacks can give the Argonauts a game and keep it close, but you’d feel a lot better with more cushion on the spread. That inspires you to open up the following wager to takers at a betting exchange.

  • Ottawa Redblacks +3.5
  • Toronto Argonauts -3.5

You’ll take Ottawa +3.5 if someone else is willing to take Toronto minus the points at stakes of $50. If you get a match on the exchange, then your opponent will have the Argonauts -3.5 and be in for $50. After the game is in the books, the winning side gets paid, again, minus the exchange fee.

Pros and cons of betting exchanges

Is exchange betting for you? As with any other form of wagering, it comes down to what works best for your approach. When deciding how you want to bet, it’s always helpful to work through the pros and cons. For exchange betting, here are some key points to consider.

The pros of using a betting exchange

  • The fees can be lower in comparison to the vig charged by sportsbooks.
  • While you’ll need to find a match for your bet, you can bet at stakes that might be frowned upon by a sportsbook.
  • It’s not you against the book, but rather a head-to-head matchup with another bettor.

The cons of using a betting exchange

  • There’s no guarantee your bet offer will be accepted by a fellow user.
  • It can take some time to scour the listings in a bid to find something that actually makes sense.
  • There aren’t as many available bet types, including parlays, and you won’t find any bonus or promo offerings.

If we walked through the same exercise with a sportsbook, we could count the wide range of markets and bet types as big positives, while negatives include the fact that oddsmakers are really good at what they do and, thus, challenging to beat long term.

As always, the choice is yours to make. There’s a lot to like about betting exchanges, but it’s not necessarily the best option for all bettors. No matter which camp you fall into, options are always a good thing to have at your disposal when it comes to betting on sports.