Understanding Betting Exchanges vs. Sportsbooks

Most new bettors begin their journey with a sportsbook. It’s straightforward: the site gives you the odds, you place your bet, and you root for your pick to hit. But there’s another option, one gaining traction with sharp bettors in the U.S., called a betting exchange.

If a sportsbook is like buying a concert ticket from the box office, a betting exchange is like meeting someone in the parking lot who offers a better deal or wants to sell you their ticket instead. There’s no middleman setting the price; you negotiate directly with another fan. It might sound intimidating, but understanding the difference can open the door to more flexible and potentially more profitable betting.

This article breaks down how these two systems work and helps you decide which one fits your betting style.

What Is a Sportsbook?

A sportsbook is the traditional way to place bets. It sets odds, accepts wagers, and pays out winners. Whether you’re using FanDuel, DraftKings, or a casino-based retail book, you’re betting against the house.

Here’s how it looks in action: if the Boston Celtics are playing the Phoenix Suns, a sportsbook might list the Celtics at -140 and the Suns at +120.

• Bet $140 on the Celtics, win $100 if they win.

• Bet $100 on the Suns, win $120 if they win.

The house profit comes from something called the vig (short for vigorish), a built-in fee subtly embedded in the odds. The goal is to balance betting on both sides to lock in profit no matter the outcome.

According to the American Gaming Association, legal sportsbooks handled more than $119 billion in wagers across the U.S. in 2023—a number that reflects both accessibility and popularity.

What Is a Betting Exchange?

A betting exchange flips the script. Instead of betting against the house, you’re betting against other users. The platform connects bettors and takes a small commission on your net winnings. This is usually between 2% and 5%, depending on the provider.

There are two ways to participate:

• Back a bet — Predict something will happen (like a traditional wager)

• Lay a bet — Predict it won’t happen (you’re offering odds someone else can accept)

Let’s say you believe Serena Williams will win her match. You can back her at +150 if that’s the best available offer. Or if you think she won’t win, you can lay the bet at that same price and act like the bookmaker, risking your money in return for the chance to profit if she loses.

According to Prophet Exchange CEO Dean Sisun, “The advantage of a betting exchange is transparency and price fairness—users determine market value, not an algorithm.” This peer-to-peer setup typically results in better odds across popular markets.

Key Differences at a Glance

Who you bet against

• Sportsbook: The house

• Betting Exchange: Other bettors

Who sets the odds

• Sportsbook: Bookmakers or algorithms

• Betting Exchange: Users (market-driven)

Fees

• Sportsbook: Built into the odds (vig)

• Betting Exchange: Commission on net winnings (usually 2–5%)

Flexibility

• Sportsbook: Limited to bets offered by the platform

• Betting Exchange: Can back or lay almost any bet

Liquidity

• Sportsbook: High, especially in major sports

• Betting Exchange: Varies by sport and event popularity

U.S. Availability

• Sportsbook: Widely available—licensed in 30+ states

• Betting Exchange: Limited—currently in NJ and CO only

Sportsbook Pros and Cons, in Practice

For new bettors, sportsbooks are often the starting point, and with good reason.

They’re user-friendly: The bets are pre-built, the interface is clean, and placing a wager takes seconds. Most offer promotions and boosts that sweeten the deal, such as parlay insurance or odds boosts. And they’re widely accessible being legal in over 30 states and tightly regulated.

But there’s a tradeoff. Sportsbooks always include the vig, meaning you’re rarely getting true odds. You also can’t bet against outcomes or set your own odds. And for bettors who win consistently or bet high volumes, limits may be imposed.

In short: sportsbooks are fast, intuitive, and bonus-rich, but you’re playing on the house’s terms.

Betting Exchange Pros and Cons, Up Close

Betting exchanges bring flexibility and often, better odds. You can set your own prices, lay bets, and avoid the embedded vig that sportsbooks charge. Odds tend to be more competitive, especially in major markets.

You’re also in control. Want to offer odds on the Liberty losing a close game? You can lay that bet. Prefer to wait for better odds on the Dodgers? Set your offer and let the market respond.

However, exchanges require a bit more patience and understanding. Liquidity can be an issue, particularly for obscure sports or low-profile matchups. And the mechanics, backing, laying, partial matches, have a learning curve that can be intimidating at first.

Exchanges are best suited for bettors looking for control, strategy, and long-term value.

Best Sports for Betting Exchanges

Because exchanges rely on peer-to-peer volume, they thrive in high-traffic markets where bettors are active and odds are fluid.

Top exchange sports in the U.S.:

• NFL and college football

• NBA and WNBA

• MLB

• Men’s and women’s tennis

• Soccer (especially Premier League and World Cup play)

Less mainstream sports may lack liquidity, making it harder to match bets or find ideal odds.

Sportsbook or Exchange? Depends on Your Style

If you’re just starting and value speed, seek bonuses, or a slick interface, stick with sportsbooks. They’re built for ease, not complexity.

But if you’re looking for better odds, more strategic play, and the chance to bet against outcomes, exchanges offer a richer toolkit.

The best bettors often use both.

A Real-World Example: Alex’s Weekend Bets

Alex lives in New Jersey and bets casually on weekends. On Tuesday, he places a +230 moneyline bet on the Giants to win using a sportsbook. By Saturday, those odds have dropped to +190 due to late-breaking injury news.

He checks Prophet Exchange and sees someone laying the Giants at +195. Rather than take the worse price at the sportsbook, he backs the bet on the exchange, saving a bit and skipping the vig.

Eventually, Alex builds a rhythm: he uses his sportsbook for props and parlays and turns to the exchange when he wants better pricing or more control.

Is It Legal?

As of 2025:

• Sportsbooks: Legal in 30+ U.S. states

• Betting Exchanges: Limited access, currently including:

  • Prophet Exchange — New Jersey

  • Sporttrade — New Jersey and Colorado

  
  

Only use platforms licensed in your state. Offshore or unregulated apps are risky and lack the consumer protections of licensed operators.

Final Takeaways: Master the Tools, Not Just the Bets

Understanding the difference between sportsbooks and exchanges isn’t just academic, it’s strategic.

Sportsbooks are built for ease. Exchanges are built for control. You can (and should) use both. Why? Because smart bettors don’t just chase value, they build a system that gives them every edge.