Inside the Trading Room
The latest and greatest news, articles and thoughts from the Sporttrade team.
November 9th, 2021
Get the Cash Out You Deserve from Your Sports Bets
By Alex Kane
Imagine you’re planning to put your house on the market. You’ve been reading articles about home prices rising to new heights and you’re finally ready to cash in. You spend a few months sprucing up the place, making minor repairs, and you’re all set to plant the for sale sign on your front yard.
Your phone starts buzzing and it’s your realtor. She’s got bad news.
There’s a new ordinance in your town that homes can only be sold to one giant corporate entity. And that entity wants to give you what it believes the asking price should be - not what the market dictates! That hot market you’ve been reading about – with buyers one-upping each other with cash offers and going beyond the asking price – doesn't apply in your town.
Does that sound like a fair and competitive marketplace? Obviously not...
That example, unfortunately, is a bit like the current state of the sports betting industry. Here’s how...
A few weeks ago, I saw the Titans were +220 on the moneyline against the Bills and figured I’d jump in on a home team that looked underrated. In Sporttrade terms, that’s roughly $31.
Things weren’t looking good for most of the night until a second-half rally saw Tennessee climb back into the game, eventually taking a three-point lead on a Derrick Henry run with 3:05 to go.
As a big Josh Allen believer, I saw 3:05 as entirely too much time on the clock and figured I’d collect as much as I could on the bet. When I tapped into the sportsbook I placed the bet on, I was met by an all-too common sight: No Cash Out Available.
If I wanted to get out of the sports bet, I would have to either place a bet on the other side or wait until the app decided to offer me a cash out. I don’t know about you, but I have better things to do than stare at an app waiting for the cash out option to turn from grey to green.
During the the two-minute warning, I was finally offered a cash out on my football bet, but the Bills had already crossed midfield and had a first down at the Tennessee 32-yard line, so the value I was being offered was poor compared to what I would’ve been able to get in the commercial break following the Henry touchdown to take the lead.
But that’s what happens all day, every day when you only have one party available to make you an offer for your sports bets. Sportsbooks have an incentive to allow you a cash out so they can mitigate losses, but they do not need to provide you with the best possible value, since they have no offers to compete against. Here’s my offer - take it or leave it!
The same thing is true when you’re placing your original sports bet; you’re buying it from one seller. So imagine buying your house; that all the houses are listed from the same seller.
That’s where the magic of a sports betting exchange comes into play.
On Sporttrade, had I saw the Titans moneyline at $31 (where price = probability) prior to the start of the game, the bet I made on that football game would’ve been worth around $51 after the Henry TD.
That $51 comes from the price of the highest bidder at that moment in time, and there likely will be multiple bidders; perhaps a couple at $51, some at $50, more at $47, and so on and so forth. Thanks to the inherent competition that any sports betting exchange creates by virtue of allowing anyone to place bids and offers, those bidders are now competing to bid the highest possible price to win the next trade.
Instead of seeing a lock symbol on the cash out, I could sell my position at any time, locking in a $20 profit and not having to bite my nails the entire drive as Josh Allen drove it all the way to the Tennessee three-yard line.
After all, it’s your sports bet, you should be able to trade it whenever you see fit and get whatever price the market determines it should be, not the whim of a sportsbook.
But that’s not all. Another advantage of a market-based approach to sports betting is the ability to set limit orders. Maybe I had to get an early start to my day on Tuesday and I was already falling asleep during the first half of the game. I could just put in a limit order to sell if the value of my position reaches $50. In the case of the Titans game, I would’ve woken up the next morning with the gain secured. The ability to sell my position at any time provides a level of flexibility that cannot be found in the current sports betting landscape.
With a liquid marketplace of buyers and sellers transacting in real time, your cash out is always available, and always the best possible price.
Why accept anything less?
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