BookiePro, a sports betting exchange built entirely on the Peerplays blockchain, will launch later this Spring. When it does, it’ll be the first of its kind in the world! Using the play token BitFun, uses will become accustomed to using a betting exchange, which is functionally a very different beast from what most bettors are used to.
Betting on sports typically takes place via one of two avenues: a traditional sportsbook or a betting exchange. Superficial similarities aside, they are actually quite different in how they operate.
Traditionally, the only option when placing a sports bet has been to use a sportsbook. When you place a bet with a sportsbook (also known as a ‘bookmaker’), you are betting directly against the sportsbook itself — the sportsbook acts as the ‘house’ — and any winnings you may have are paid to you directly from the sportsbook’s own funds. You might say that the sportsbook is a counterparty to your bet.
Some well-known sportsbooks are Bet365, William Hill and Bovada (which offers BTC betting). The Vegas sportsbooks are also — surprise! — sportsbooks.
The sportsbook model has been the standard way to bet since at least as far back as horse racing in England in the 18th century. However, in the very last years of the 20th century, a quite different method of sports betting was invented, also in the UK. This new model was called the “betting exchange”. Simply put, a betting exchange is a platform where sports bettors match each others’ bets. With a betting exchange you do not bet against the house (sportsbook, bookmaker) — you bet against other bettors.
A useful analogy is a stock exchange. A stock exchange is a platform or marketplace where you can buy and sell stocks with other users of the exchange. The stock exchange does not buy or sell stocks — it is simply a matchmaker between two parties who wish to take the opposite side of the same deal (one buys a stock, the other sells it).
In the same way, a betting exchange is never the counterparty for a bet placed by any of its users — it is a matchmaker for two parties who wish to take opposite sides of the same bet (one ‘lays’, the other ‘backs’… more on this in a later post). And, just like with the stock exchange, the betting exchange takes a small fee or commission from users for the use of the platform (again, more on how betting exchange commission works in a later post).
One interesting area of flexibility in betting exchanges (compared to sportsbooks) is the ability to set the odds (or “price”) of your bet yourself. Even if no counterparty is ready to take your bet straightaway, the bet will be placed “unmatched” on the orderbook for all other users to see and can be taken (“matched”) at any time by another user. This is in contrast to a sportsbook, where your only option is to take or leave the price being offered.