Inside the Trading Room
The latest and greatest news, articles and thoughts from the Sporttrade team.
August 23rd, 2023
How Sporttrade is Redefining the Sports Betting Exchange
Most people have only recently become exposed to sports betting since PASPA was struck down by the Supreme Court in 2018. The 1992 federal law essentially banned sports wagering in the United States, minus a few. Once lifted, the sports betting gold rush began.
Tired of the Kevin Hart commercials? Yeah, me too.
The opening of mobile sports wagering has also ushered in a new era of sports betting education and with that, different fundamental operating philosophies.
You’re no doubt used to the bookmakers model used by the FanDuel and DraftKings’ of the world. Exchange wagering, however, offers a much more customer-friendly way of doing business that doesn’t rely on massive hold percentages and ridiculous taxes built into your odds.
Exchange Betting Explained
At its core, exchange wagering offers betting customers better odds and a chance to choose their own pricing for the event they're willing to bet into, opening the other side of that bet to the public for anyone to come in and take. This is known as peer-to-peer betting and it is kneecapped at times by available (or more frequently, not available) liquidity in markets. Exchanges also remove the tax (vig, juice, etc) associated with bets posted by a bookmaker, allowing for better odds.
When Betting Exchanges Began
Betfair is credited for introducing the sports betting exchange. Andrew Black, Edward Wray is an exchange in Europe and Australia which is largely accepted as the most successful exchange to date. In some circles, it is The Way Exchanges Work.
But like most innovators, Sporttrade has divergent opinions on this and believes it has streamlined the process to not only make it more efficient, but better for bettors.
How should a sports betting exchange operate? What should it look like? How should it benefit the customer?
A sports betting exchange in Sporttrade’s view instills 3 pillars:
Incredibly fast executions with no delays pre-game or in-game
Super Liquid (meaning, thousands of dollars available to bet into)
The best odds, even when you include commission.
Without these three things, a sports betting exchange cannot operate to its full potential. Flat out. Full stop. Let’s discuss the three pillars and their importance.
Make Your Bets Quickly
Fast executions pre and in-game are essential to sports bettors getting the best price, regardless of what kind of sports bettor you are. Sportsbooks profile their customers in order to protect themselves. It’s why winning bettors are limited to maybe $100 bets once they’ve proven a track record of success. You win, you get limited (or banned). That’s the Big Casino mentality and it ruins the ecosystem of sports betting.
Sporttrade charges a 2% commission on your profits. This is significantly less than a sportsbook. While a sportsbook is a higher margin, lower volume model, Sporttrade is a lower margin, higher volume model. This provides an environment where you feel you’re getting the best price without fear of being reviewed, limited or banned. Plus, you’re able to move frictionlessly through the entire experience. Thus, fast executions with no delays is a must for a sports betting exchange.
Liquidity is King
Despite being 2nd on this list, liquidity is the lifeblood that powers the entire exchange. Without money available in these betting markets, there is no betting. Sporttrade uses a hybrid mix of peer-to-peer and market makers, similar to a stock market, to seed betting markets ensuring liquidity is available. You can request more if you’d like to bet into a market with less liquidity available than you see fit. Listed liquidity also provides transparency into how much money you can get down immediately. This mix of approaches ensures your market order bets will be taken either by another bettor in the ecosystem or the market maker immediately. The ‘limit order’ function provides users the chance to name their own price and see if it gets taken up on the other side. Typically, if a betting customer is placing a limit order above the midpoint (the true price of an outcome) the market maker will take this bet, locking in even more value for the player.
The Best Odds Equal the Best Bets
Finally, the best odds. Sports betting is like shopping for a new TV. You don’t walk into Target, point at the first television you see and say ‘that’s the one’. You at least give Walmart, Best Buy and Tony’s Discount TV Shack a Google to see what they have as well. So why wouldn’t you do that for your bets? This practice is an absolute must for every bettor, but If you’re a high to mid volume bettor routinely finding the best odds will mean you win more when your bets win and you’ll lose less when they don’t. It’s not a crazy method, it’s just math.
By serving up the best odds, hyper liquid markets and immediate bets pre-game and in-game, Sporttrade has become the sports betting barista you’ve always wanted. It’s the sports betting exchange of the future, available in your hand now. You can move seamlessly through the app, placing bets at lightning speed at the best odds with the ability to trade in and out at a moments notice and only for a 2% commission (if you win). This is what a betting exchange should be. This is what Sporttrade is.
NOTE: Exchange betting is not available in Colorado.