Venues
Betting exchange
A platform where bettors bet against each other at odds they set, with the operator taking a commission on winnings.
Betfair pioneered the model in 2000. A backer and a layer agree odds; the exchange matches them and charges a few percent of net winnings. Prediction markets are the same idea with contracts priced in cents instead of decimal odds and, in the US, a commodities licence instead of a gambling one.
Exchanges show true market prices without vig, which is why professional bettors prefer them and why their prices are used as the fair benchmark.
Most US states never licensed betting exchanges, which left a gap that prediction markets have now filled.
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Frequently asked questions
- What does "Betting exchange" mean?
- A platform where bettors bet against each other at odds they set, with the operator taking a commission on winnings.
- Why does betting exchange matter for prediction markets?
- Most US states never licensed betting exchanges, which left a gap that prediction markets have now filled.