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Online Sportsbooks and Betting Exchanges: A Beginner’s Guide

By J Phillip Vogel

With the exception of the occasional “friendly” bet that’s made between friends, for untold years sports wagering has been done through the services of a bookmaker, a person or organization set up to “book” bets, pay winners and collect from losers.  

On the whole, it’s been a solid, successful system that has offered punters the action they craved while securing a profit—and sustainability—for the book.

Over the past few years, a new breed of betting forum has crept into the gaming scene, an industry whose novel approach to wagering has set the stage for a potential sportsbetting coup: betting exchanges. 

These person-to-person sites have turned the wagering world upside down, letting gamblers confront one another rather than the house.  But which is better?  That’s for you to decide.  

Traditional Sportsbooks vs. Betting Exchanges

Before getting mired into a debate about the merits and flaws of each system, it’s important to have at least a working understanding of the two formats.  At their most basic levels, they are:
Sportsbook:  An organization that accepts wagers on sporting events.  In order to provide bettors with their services, bookmakers charge a small commission on all losing wagers.  That commission ranges from a typical 10% to as low as 5%.  Following the posted event, the bookmaker pays winners according to predetermined values, or odds.
Betting Exchange: A betting exchange facilitates wagers between gamblers directly.  They allow bettors to act either as the book themselves—setting things up to earn a profit through others—or to search for the best odds courtesy of another bettor. The bettors are involved only with each other, with the exchange taking no direct interest in any wagers.   Instead, the exchange makes its profit by charging a commission, which is calculated as a percentage of net winnings for each customer on each event, often 2% or less.

Traditional online sportsbooks offer a variety of benefits.   For starters the biggest books provide bettors with an extremely wide range of events—just about every major and minor event the world over—as well as diverse betting opportunities including reverse bets, round robins, futures, propositions, straight wagers, parlays, teasers, if-bets, etc.

Also, the better books tend to offer players more in terms of incentives then their exchange competitors. These can take many forms, such as sign-up bonuses, VIP points, 1/2 “juice” specials, and referral bonuses.  In ideal cases the book will also feature a combination of recurring incentives (such as monthly deposit bonuses) so punters can perpetually augment their bankroll. 

Finally, let’s not neglect the fact that traditional online sportsbooks are relatively easy to use, simple to navigate and tend to come complete with a host of resource options and links that can assist gamblers while making a decision.
Like their more traditional counterparts, betting exchanges have their own set of special perks. Punters, for example, can back their selection just as they would a traditional bookmaker, but expand to “lay” a price; that is bet against a team winning, rather than betting that they do win.   In addition, when it comes to specific bet, punters are free to ask for a better price than what’s offered in the hope that someone will come along and match that request.  In fact, the odds available on a betting exchange are frequently superior to what’s offered by the traditional bookmakers, despite the commission charged.

Another advantage of the exchange is the ability to alter one’s position during a long-term event.  For instance, if you backed team X for $10 at 16-1, later you could lay them at 2-1 in order to guarantee a profit.  You could offer $30 of your potential profit in order to win $15 if they fail, thereby covering your initial $10 stake.  In this case, your first bet of $10 would return $160 with a victory.  In the case where you are laying team X for $15 of your opponent’s money to $30 of your own, team X’s loss would earn $15.  When both bets are accumulated the result will either be a $130 profit with a team X victory ($160-$30=$130) or a $5 profit (-$10 + $15=$5).
On the downside, however, betting exchanges can face restrictions that may limit a bettor’s opportunities.  For example, exchanges are not suited to unrestricted multiple parlay betting. Major exchanges like Betfair do offer accumulators of their own content but these are typically limited.  Also, exchanges tend to restrict the odds that can be offered to between 1-100 and 999-1.
As you can see, there are plusses and minuses associated with both online sportsbooks and betting exchanges—both are great, neither is perfect.  Tour through the different sites, get a feel for how each one works and choose the one that suits you the best.

Leading Sportsbooks and Betting Exchanges

Looking for a reputable sportsbook or betting exchange? Or perhaps you’d prefer a site that offers both options?  Here’s a list of some of the Net’s top sites.

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