The house always wins, right? We’ve heard that once or twice. Our friends at Prophet Exchange recently overhauled the way they list games, and it got us thinking about how the savvy bettor can use betting exchanges to, in effect, become the house.
Initially, Prophet ran spreads solely at even money. Because they weren’t moving the odds on the spread, that meant they had to offer different numbers on either side. You’d get situations like this where the Packers were -3.5 and the Titans were +3. All the money would flow to Green Bay if the market was at -3.5. The liquidity ends up on one side.
By pricing spreads, the numbers are in line with the market. This encourages more balanced liquidity by being able to get the Packers -3.5 or Titans +3.5.
If you like the Packers -3.5 for $500, you’ll get the bet on the spot because there’s more than $500 in the pool. If you want it for $1,000, you’ll get the maximum for whatever is available, while the remainder adds liquidity to the other side.
Immediately, $605 of your $1,000 bet would be in action in the above screenshot. The remaining $395 would go to the Tennessee +3.5 pool. The rest of your bet is completed once someone makes the corresponding play on the Titans.
Creating Markets on Betting Exchanges
Here’s where the fun starts. Exchanges allow you to offer your own alts and set the odds. And you can use the tools at Unabated to help you create your own markets.
Using the Unabated Line of -3.5 at +110 and the Alternate Lines Calculator, the vig-free price on Green Bay -1.5 is -141. We have a target.
At FanDuel, they have the Packers -1.5 at -170 and the Titans +132 on the comeback.
We know we can do better than that. If we put in a request for Green Bay -1.5 we can submit it at -136, because we’re offering a bet where we’re laying less than the -141 fair price says we should. (Don’t forget, though, to account for Prophet’s 2 percent commission when setting your price.)
That request creates an offer of Tennessee +1.5 at +136. We’re saying, in effect, we want to bet the Packers at this number at this price. Someone else has to come along and take the other side to make it a bet.
Next, request the Titans +1.5 at +160. We want to get paid more than +141. That creates an offer of Green Bay -1.5 (-160). Now we’re working like a sportsbook. We’ve created a two-way market of:
Green Bay -1.5 (-160)
Tennessee +1.5 (+136)
We know both of these bets are plus-EV because we priced them out using the Alternate Lines Calculator. If both sides are filled, you’ve created an arbitrage play. You’ve also beat FanDuel’s prices. If only one side gets filled, you’re still in a plus-EV spot as long as the market hasn’t moved against you. If you do end up in an arb, you’re only paying the commission on your net win. You don’t get taxed twice.
Tend to Your Garden
And there’s the rub. When you’re the house, you have to be ready to move quickly or someone might pick you off. If Aaron Rodgers falls down a flight of stairs in an ayahuasca-induced haze an hour before kickoff, you need to be ready to trade out of your positions.
More conservative-minded bettors may want to use betting exchanges only for their powerful price discovery abilities. But if you’re willing to watch your offers like a hawk, you’ve created a powerful position for the price of a 2 percent commission.