An Overview of Different Betting Platforms

Traditional Sportsbook

Traditional sportsbooks are betting platforms that act as "The House." This means that they set their odds, and accept bets. When you bet using a sportsbook you are betting against them, not against other bettors. This can lead to a sportsbook being at risk if too many bettors bet the same side of an event. Sportsbooks manage this risk by adjusting the odds to try and draw more bets on the opposite side. The house makes money by taking a small percentage of each bet, known as the "vig" or "juice." This fee is built into the odds and ensures that the house profits over the long term, regardless of the outcomes of individual events.

Traditional sportsbooks maintain an edge by setting the odds in a way where they maintain mathematical advantage. For example, if the true odds of an event are 2:1, the house might offer 1.9:1 to ensure a profit margin. A sportsbook aims to balance the books so that it collects more money from the players on the losing side of the bet than it owes the players on the winning side of the bet. This way, it can pay winners with the money from losers and retain the vig as profit.

• Examples: BetOnline (unregulated), Caesars (regulated).

Pros:

• Large number of markets available.
• Competitive bonuses and promotions.
• Max bet amounts are high compared to betting exchanges in most instances.

Cons:

• Vig is typically higher than betting exchanges.
• Bonuses and promotions may have strict terms and conditions.
• Often limit winning bettors.

Betting Exchanges

A betting exchange is a unique platform where bettors can wager against each other rather than against a traditional bookmaker. Unlike traditional sportsbooks, where the bookmaker sets the odds and takes on the risk, betting exchanges allow users to both back (bet on) and lay (bet against) outcomes. This model fosters a competitive market where bettors set their own odds, often resulting in better value compared to traditional sportsbooks.

One of the key advantages of a betting exchange is the flexibility it offers. Bettors can trade positions in real-time, similar to stock market trading, allowing them to lock in profits or cut losses as events unfold. This dynamic environment attracts experienced bettors who appreciate the ability to leverage their knowledge and strategies more effectively. Additionally, because the odds are determined by market forces, betting exchanges often provide more accurate reflections of the true probabilities of outcomes, leading to potentially more lucrative opportunities for sharp bettors.

Liquidity is a crucial concept in the context of a betting exchange. It refers to the amount of money available to be matched on a particular market. Higher liquidity means that more bets can be placed and matched quickly at competitive odds, enhancing the overall user experience. Low liquidity, on the other hand, can result in difficulty finding matches for bets or less favorable odds, making it an important factor for users to consider when choosing markets on a betting exchange.

Betting exchanges make money by charging a small commission on net winnings, typically around 2%, ensuring they remain profitable without taking on the risk of the bets themselves. Since betting exchanges do not act as the house and always charge a commission to the winner, they do not wager-limit winning bettors. This makes them matched betting and arbitrage friendly and encourages as much volume wagered as possible, because higher volume means increased commission for the exchange. However, the complexity of the platform can be a barrier for beginners, who may find the traditional sportsbook model more straightforward.

• Examples: Sporttrade (regulated), ProphetX (sweepstakes).

Pros:

• Often better odds due to peer-to-peer betting.
• Greater control over bets.
• They do not limit bettors, and encourage matched betting.

Cons:

• May be complex for beginners.
• Less common than a traditional sportsbook.
• Liquidity may be limited.

Prediction Markets

Prediction markets are structured like the stock market, but instead of buying and selling stock you are trading on the outcome of future events. This includes sporting events, but it also includes a much wider range of events like weather and political elections. Prediction Markets are similar to Betting Exchanges in the sense that you are not going against the house. You are trading against others, whether that is a large scale market maker or another individual trader. There are a few ways Prediction Markets tend to differ from Betting Exchanges.

Trading vs. Betting: With Prediction Markets you are "trading" on the outcome of a future event, not betting on it. It is effectively the same, but good to be familiar with the term.

Contracts: Prediction Market trades are tied to contracts that are priced between 0 and 99 cents. If your prediction is correct the contract settles for $1. If it is incorrect the contract settles for $0. As an example if you have 10 contracts on the Eagles moneyline and the Eagles win, you receive $10. If the Eagles lose, you receive $0.

Contract Pricing: Odds on Prediction Markets are often displayed in contract pricing, which is the cost to buy a single contract for that event.  An example would be Eagles moneyline at 75 cents. Continuing from the example above if you bought 10 contracts on the Eagles moneyline and the price was 75 cents, the cost of the contracts would be $7.50. If the Eagles win and you bought 10 contracts at 75 cents your total return is $10. Your cost, before any fees, was $7.50, leaving you with $2.50 of profit. If the Eagles lose your return is $0, resulting in a loss of $7.50.

Execution Fees: Some Prediction Markets may charge an execution fee on all trades. You pay this fee no matter whether your contract settles as a win, loss, of a push. Sticking to the same example of purchasing 10 contracts at 75 cents the execution fee might be 15 cents. This brings your total cost to $7.65.  If the Eagles win your profit is $2.35, $10 - $7.65 = $2.35. If the Eagles lose your return is $0, resulting in a loss of $7.65.

Examples: Kalshi, Polymarket

Pros:

• Often better odds due to peer-to-peer betting.
• Greater control over bets.
• They do not limit bettors, and encourage matched betting.
• Available in more locations.
• Often have very high liquidity.

Cons:

• May be complex for beginners.
• Potential fees might make odds worse.

Peer to Peer / Marketplace

Peer to Peer (P2P) betting website sometimes called Marketplaces are essentially exchanges. They often do not call themselves a Betting Exchange for legal reason, and they are unregulated. Similar to a Betting Exchange you are betting against other people and not "The House". Peer to Peer platforms allow you to request better odds than those currently available, and are subject to the same potential liquidity concerns as a traditional Betting Exchange.

Since P2P sites do not act as the house and charge a vig, they make money in a few different potential ways.

• Commission on winnings
• Fee on deposits
• Subscription fee

Examples: BroThrow

Pros:

• Often better odds due to peer-to-peer betting.
• They do not limit bettors, and encourage matched betting.
• Available in more locations.

Cons:

• May be complex for beginners.
• Potential fees might make odds worse.
• Often operate in a legal grey area.