Will Betting Exchanges Come to the U.S.?
Regulated online sports betting is spreading across the United States. At the time of writing, legal online sports betting is available in Colorado, New Jersey, Indiana, Pennsylvania, Michigan, West Virginia, Illinois, Arizona, New York, Wyoming, and more. But what types of sports betting are available in the U.S.?
Conventional sports betting to replace fantasy sports
Betting on fantasy games has long been available in the United States and continues to be popular. However, legal online sports betting has developed significantly over the past few years, with standard online bookmakers available in several states. DraftKings, BetMGM, Caesars, PointsBet, and BetRivers are all examples of leading US online sportsbooks operating in various states. They each offer the opportunity to bet against the house on a multitude of sports, including American Football, Basketball, Ice Hockey, Baseball, Soccer, Tennis, and Golf, to name but a few.
All the top online sportsbooks have a live betting section where it is possible to bet on sporting events as they happen. In-play betting has become hugely popular and is one of the greatest gambling innovations of the past 20 years. However, there is one form of sports betting that has yet to be made readily available and that is the betting exchange.
A betting exchange differs to a standard online bookmaker because instead of betting against the house, you are betting against other gamblers. Online betting exchanges make money via a commission charged on each bet; they do not make any money from losing bets. This differs from a sportsbook because a sportsbook makes money from losing bets. Betting exchanges rely on the users of the exchange to back and lay events and this is what generates the money paid out to winners. Bookmakers must put their own money on the line each time a person places a wager.
Offering betters odds to the customer?
There has long been a theory that the betting odds offered at a betting exchange are superior to those available at a sportsbook. In truth, if you are willing to compare betting exchanges and sportsbooks each time you bet, you will find minor differences overall. One area where there is sometimes a difference is when betting on a favorite and an outsider. The odds for a favorite to win tend to be better at a bookmaker, while the odds for an outsider to win are often superior at an exchange. The reason given is that bookmakers need to make their odds for the favorites more competitive to attract business as most people are backing favorites. In contrast, those looking to back an outsider do so in the hope they are going to land a big win and are less concerned whether the odds are 40/1 or 60/1.
UK gambling brand Betfair did open a betting exchange in the United States, but they withdrew from the country in 2020. US Betfair Exchange owner Kip Levin spoke about the decision to remove the betting exchange from the United States market and said, “The exchange did not manage to reach the critical mass necessary to make the operation profitable and efficient,” before continuing, “There are several reasons for [our] decision to withdraw from the NJ market, including a customer base used to exotic wagers and a reluctance by major U.S. racing associations to embrace [a] different business model.”
The failure of Betfair has not deterred Prophet, which has entered an agreement with Caesars Entertainment to launch a new peer-to-peer sports betting exchange. Having started life in the UK, Prophet is hoping their partnership with Caesars will bring them the exposure they need to make their betting exchange a success. If they do succeed in the U.S., this could lead to the introduction of more betting exchanges in the future.