So you’re starting to get a handle on the whole crypto sports betting exchange thing.
You know what a crypto sports betting exchange is, and you know why you should use one.
… but you’re not quite sure how to use a sports betting exchange.
Let’s pretend that learning how to be a profitable sports bettor is like learning how to ride a motorcycle.
At this point, you’re in love with motorcycles, have watched some motorcycle videos, and even ordered your first Harley. One small problem…you forgot to learn how to actually ride one.
That’s okay, I’m about to teach you how to ride a motorcycle use SportX.
Ready? Let’s go.
The Bet365 Problem
So here we are, talking about betting exchanges. The core problem that betting exchanges solve is something we call the Bet365 problem.
The Bet365 Problem: keep your users in the dark and feed them shit (odds)
The Bet365 problem states that in order for sportsbooks to increase profits, they need their users to lose as many bets as possible. This is because sportsbooks act as “the house” and take the opposite side of every bet with their users. The only way for Bet365 to increase profit is to make sure their users lose more bets.
The Bet365 problem results in a conflict of interest that prompts Bet365 to create unfavorable conditions for their bettors. To increase profit, Bet365 does three things:
1) No Transparency: Keep users in the dark
2) Shitty Odds: Hide high fees of 5-10% in the odds you offer to users
3) Lifetime Bans: Find any winning bettors? Ban them. Immediately.
Profit remains high for Bet365 as long as they enforce high fees, terrible odds, and outright bans for bettors who consistently win. How well is Bet365 doing their job?
Pretty damn well. Their CEO made 340M in 2017. That’s a lot of losing bettors.
A betting exchange solves part one of the Bet365 problem by allowing users to bet peer-to-peer, instead of against the house. Since users bet peer-to-peer, betting exchanges do not make money when users lose bets. That means there’s no conflict of interest between betting exchanges and their users.
What’s the end result? Users that use betting exchanges get better information, better odds, and higher profits.
So… How Does SportX Work?
On a betting exchange, users bet peer-to-peer. That means that there are two people involved in every bet: someone who offers odds (the Bookmaker) and someone who takes odds (the Bettor).
The bookmaker and the bettor are matched up using an order book.
The Order Book
Say hello to your new best friend….. the order book.
When you log onto a betting exchange and choose a market, you’ll find an order book that looks like this:
The order book lists all the available orders for a particular market. Each order includes two important variables: Odds and Size ($).
Odds represent the price of a bet. If you bet $100 on an event at odds of 2.0, your return will be $200 ($100 x 2.0). Easy right?
If odds represent the price of a bet, size ($) represents the max bet available at that price. For example, the top two orders on the Chicago Cubs Money Line market are:
Size: $160 Odds: 2.023
Size: $303 Odds: 1.989
If you bet $160 or less, you will get the top odds of 2.023. If you bet more than $160, then your odds will be an average of the top available orders. For example, if you bet $200 – your odds would be 2.017.
Get the Best Odds with Bettor Mode
The order book will always sort odds from best to worst, which means you can always find the best odds at the top of the order book. Bettors using bettor mode will be taking orders offered by bookmakers.
For example, if I want to bet on the Cubs vs Cardinals, I’d use Bettor mode. All I have to do is enter is my bet amount ($), and the exchange automatically fills my bet with the best odds from the top of the order book.
In this example, I entered $160 as my bet amount and the exchange autmatically filled my order with the best odds available, 2.023.
Keep Reading: SportX’s Step-by-Step Guide to using Bettor Mode
Set Your Own Odds with Bookmaker Mode
Lucky for you, the fun doesn’t stop there… by using bookmaker mode, you can offer odds for other bettors to take. Submit orders to the market with your own custom odds and sizes ($) for other traders to accept.
Bookmaker Mode is a win-win since both people get better odds! To illustrate how, let’s look at the Dodgers/Red Sox Money Line order book.
The top odds available on the market are 1.994 for the Los Angeles Dodgers, and 1.895 for the Boston Red Sox. We’re betting on the Dodgers, but want better odds than 1.994. We decide we want odds of 2.05, and are willing to bet 100 DAI.
We submit our desired odds and bet amount in Bookmaker Mode, and as seen in the photo above, our new order has odds of 2.05, which are 2.8% better than the previously available odds (1.994). Higher profit for us!
On the other side of the order (Boston Red Sox), we offered odds of 1.952, which are 3% better than the previously available odds (1.895). Higher profit for other traders!
This is the magic behind betting exchanges: both sides can get higher profit by offering and accepting orders.
Keep Reading: How to set your own odds on SportX
It takes two to tango – using Bookmaker Mode profitably
An order that’s never filled is an order that isn’t profitable. Here are a few tips to ensure your bookmaker orders are accepted by other traders on the market.
1) Compare your odds
In order to ensure your order gets accepted, compare the odds you’ve offered with the current order book to ensure they are near the top of the book. Traders won’t accept your order if there are offers with higher odds available.
2) Offer odds on active markets
If you’ve submitted an order that’s at the top of the orderbook and it still isn’t accepted, it may be because other traders are not trading on that market. Check the Popular markets tab to help you see which markets are the most active.
Market Making: Generate profit with no risk
Using the bookmaker allows you to offer odds on both sides of a market. When done correctly, this can result in a guaranteed profit. Here’s an example:
David can submit a $100 bet at 2.104 odds on both the Los Angeles Dodgers and the Boston Red Sox. Regardless of who wins (assuming other traders accept both these offers), David will lose $100 on one side of the bet, and return $210.40 on the other side of the bet for a locked-in profit of $10.40, representing a 5.20% return before fees.
That’s cool and all, but what about crypto?
Betting exchanges solve both parts of the Bet365 problem, right? They give users better odds and better information. Betting exchanges have no conflict of interest with their users…right?
Betfair vs The Bet365 Problem
20 years ago, a newly founded sports betting exchange paraded a coffin through the streets of England.
The coffin represented a funeral procession for traditional sportsbooks like Bet365. More importantly, it represented the launch of Betfair, a young betting exchange seeking to disrupt the British betting landscape forever.
Despite competing with a significant funding disadvantage, Betfair’s model of bringing stock market efficiency to sports betting was extremely successful. By 2002, they controlled over 90% of all exchange betting in the world.
The rise of Betfair seemed to have solved the Bet365 problem. Users were happy and profitable.
All of a sudden, Betfair was bought by a sportsbook and winners started being charged a 20% tax on profits.
Betfair’s new owners put profit first and users suffered as a result.
Crypto allows platforms like SportX to reverse the narrative, and ensure that users interests are always placed first.
Traders on SportX earn tokens every time they place a bet. These tokens represent ownership in the SportX platform. Since traders have ownership, their interests are now 100% aligned with the platform, or as we like to say:
Shared ownership = shared skin in the game
In summary, a betting exchange + crypto = no Bet365 problem, ever.
1) Betting Exchange = Users bet peer-to-peer, instead of against “the house”
2) Crypto = Users get ownership in the platform
3) Conflict of interest = Non-existent
DAI, and why it matters
I know what you’re thinking. Wasn’t bitcoin worth $20,000 one day and $3,000 the next? Isn’t crypto volatile? Is all my money going to disappear?
Introducing: Stablecoins. A stablecoin is a type of crypto that isn’t volatile, since its value is pegged to a stable currency. SportX uses a stablecoin called DAI. 1 DAI = 1 USD, always. How does it hold its value? Every unit of DAI is overcollateralized with Ether at a 1:1.5 ratio.
Ether is the native token of the Ethereum blockchain, and the second most popular token in the world by market capitalization.
If that sounded confusing, it’s okay. Just remember this: 1 DAI = 1 USD. That’s it.
With crypto, you control your funds
With traditional online sports betting sites, bettors must deposit money onto the site in order to bet. This results in two costly problems for users:
- Users have to pay deposit and withdrawal fees of up to 4%.
- Payout times on winnings can be as long as 5 business days
Thanks to crypto, you can place bets on SportX without ever having to deposit money onto the site. All funds are stored in your crypto wallet until the moment a bet is placed, meaning:
- Traders do not have to pay deposit and withdrawal fees
- Payouts are deposited directly into your crypto wallet within 30-45 minutes of the event ending
Congratulations! You now know how SportX works.
Ready to ride your brand new Harley? Let’s go make some money.