The Ontario sports betting market is in for a massive shakeup. On July 26, STX launched as Ontario’s first licensed sports betting exchange.
The operator is brings a unique form of sports wagering to a very crowded market. There are over 30 legal Ontario online sports betting sites. So STX hopes its revolutionary style stands out in this highly-saturated market.
STX received the approval of the Alcohol and Gaming Commission of Ontario in May. The company signed an operating agreement with iGaming Ontario that was approved in July. Ontario is the first market for STX.
What is a sports betting exchange? We are going to answer that and help you decide if it is something you might want to try.
What is a betting exchange?
Most people know that odds are associated with the everyday money line, spread and totals markets. Whether it’s -110 odds for a spread or an over/under for a specific game, customers must pay the sportsbook operator a small price to be able to use their platform to bet.
A sports betting exchange (also called peer-to-peer betting) allows customers to wager against each other instead of the sportsbook operator. By doing so, it comes with lower fees for the users than are typically associated with traditional sportsbooks. The two customers will agree on the odds and stakes for a game and bet against one another.
For example, instead of wagering $110 to win $100 on the Toronto Raptors to cover the spread of 3 points against the Detroit Pistons, customers can post their $100 bet for the same wager and wait for another customer to accept their action.
Betting exchanges have low overhead because they don’t need expansive odds-making teams. So, they charge a small fee on each bet which is much less than the 5-10% a traditional sportsbook takes. You won’t be betting on NFL point spreads at -110 at an exchange. Instead, you can get the odds closer to -101 or even money.
Ontario would be the second North American jurisdiction to offer exchange betting
New Jersey is the only jurisdiction in North America that currently allows exchange wagering. Prophet and Sporttrade both offer exchange betting.
The concept has yet to gain traction in the United States because the Wire Act prohibits gambling across state lines. That limits the size of betting pools since exchange wagering is less popular that traditional sports betting.
Can STX infiltrate the Ontario sports betting market?
With so many online sports betting sites live in Ontario, some believe the supply is higher than the demand. However, STX offers customers a different way of getting in on the action that could entice users.
The unique approach of allowing users to determine the odds and having trades only be completed once the buyer and seller have agreed on a price is a dynamic that most sports bettors have never tried.
STX says it will allow bettors to bet responsibly by utilizing its application programming interface, risk mitigation tools and transparency.
STX founder Justin Deutsch recently spoke with Canadian Gaming Business. He says the company is ready to take advantage of a unique opportunity in the Ontario sports betting market.
“While the rest of the industry has been battling in a land grab, we have been in the shadows focused on perfecting our platform,” said Deutsch. “We are beyond excited to showcase our hard work for the enthusiastic sports betting community in Ontario.”
With markets open 24/7, STX users can place orders throughout a game or a season and make decisions as the market changes. Although the launch will focus on the exchange, the STX platform is built for a traditional online sportsbook and casino, gearing it up to be the first all-in-one online gaming platform in North America.
“The focus at STX is not only on bringing a new demographic of day trader into the world of sports betting, but also providing a better experience for every potential customer from recreational to professional,” said Deutsch. “Loyalty is scarce in this industry and we believe that is a function of lack of product innovation and swift response to customer needs, both things we will provide at the highest level.”
Can a Sports betting exchange work?
It’s likely the exchange will mainly be used by hardcore bettors that focus on markets like NFL point spreads. Traditional books will retain bettors who don’t care as much about price and concentrate on props, futures and parlays.
Pros of betting exchanges
- Lower fees: Because you’re betting peer-to-peer, there are no sportsbooks to take their significant cuts. You’ll pay a few cents per dollar as the winning bettor instead of 10 cents. Exchanges are very customer-friendly.
- Everything is a two-way market: Traditional sportsbooks will often offer only one side of a bet. When you want to bet on the Chiefs to win the Super Bowl at +600 at an exchange, there may be someone on the other side to take -600. That gives you the option to take “yes” or “no” of pretty much every bet type.
Cons of betting exchanges
- You won’t always get your bets matched on more minor sports: You will frequently be able to find someone to take the other side of a $100 NFL point spread bet. But if you’re trying to bet obscure sports or bet types, your bet may not always get matched.
- Lack of bonuses. Betting exchanges don’t offer the same free money or free-bet promotions as traditional sportsbooks.