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Decentralized Esports Odds: How do Betting Exchanges Work?

If you are a frequent punter, whether e-sport or regular events, you will enjoy the benefit of knowing about this so called “mutual” or “lay betting”, which takes place in a bet exchange, rather than a bookmaker.

Some on-line services provide the selection of a “betting exchange” rather of the set probabilities the bookies computes.

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In May 2011, a regulation was passed rendering bet exchanges a lawful wagering system in California, and the reputation and popularity have grown since. Through the large company Betfair, mutual wagering continues to be accessible in the united states since 2011. The american-based gambling exchange allows players to place money against one another on horse races and other sports.

This person to person gaming system enables individuals to trade or change wagers with each other. The majority is denominated in decimal odds, often times the punter are employed for such type of bets up to 25% greater odds than players are offered on regular sportsbooks.

The mathematics behind this really is simple, the payout is often around 100% using a gambling exchange in the place of as much as 125% using a book-maker that is standard.

These exchanges generate income through charging a fee that is deducted from winning amounts. The standard fee that is used is typically 5% shared among all winners.

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Over the last couple of years, this method of placing bets has spread out to reach the e-sport gambling communities, with sites such as Fairlay and Onehash, to name a few popular ones, offering customers the chance to wager on virtually any e-sport match you could think of. In fact, Fairlay even offers the possibility of creating your very own market, if your match is not there already, or if you want a specific market like First Blood in a League of Legends game, or if a CS:GO player will get a headshot during a round. Then if others find your event interesting, they can place bets and earn you a commission for market-making.

It may sound too good to be true, but mutual betting does come with its own set of downsides. The most obvious one of these is the fact that you risk placing money on a wager but never get that bet realized since no one place money against you. This situation leaves your money hanging till the market closes, but does not cost you anything. The event will be voided, and your money returned.

If you have been waiting for the TSM vs CLG match for months to win big by betting all your hard earned money on TSM to win, you will most likely be very disappointed to see that your wager did not go through in the end. Especially if TSM won it.

So depending on what sort of motivation is behind your gambling habits, you might prefer to use a regular old centralized bookmaker.

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If you, on the other hand, are a bettor looking to make a profit in the long term then you will find great value in stalking the mutual markets and look for good opportunities.

Just keep in mind that your own wager will affect the final odds you receive when the market closes for betting, so do not get tempted by numbers that are twice, or even thrice, as high as on bookmakers. If the “bank” or “pool”, the total amount of money wagered on all outcomes, is very small then the probabilities will fluctuate a lot on newly made bets, while on markets that have a large amount of cash placed will allow bigger amounts with less changing in the odds.

For these reasons, it is a common strategy to place money in the last hour or so, before the event closes. By then, you will have a decent idea of how popular the game is and thus how much you can bet without lowering your own odds significantly, but even if you do so, chances are someone will find the opposite market interesting since it rose proportionally when you placed your bet, thus increasing your probability further depending on how much they wager.

Especially for e-sport, this unique betting scheme allows for very interesting options. Since e-sport is generally harder to predict than regular sports, you will discover that many people disagree on who is best or are overly confident about one contestant. A good example of this, even though I, unfortunately, cannot provide historical data to proof it, was the League of Legends worlds 2016 between SK Telecom T1 and Samsung Galaxy. With odds for Samsung Galaxy exceeding 120.0 on Onehash due to immense belief in SK Telecom T1 to pick it up, the multiplier for them was at a very low 1.0022. Now, even though SK Telecom T1 won the match, making the beliefs a reality, the odds for Samsung Galaxy was ten times greater than the average ones on regular bookmakers, making it a mathematically great choice to put money on.

If you wanna know why, you should read up on the Kelly criterion and “value bets”.

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This was an extreme case of “bloated” odds in a bet exchange due to a biased general opinion. Less impactful instances happen every single day, making mutual wagering a playground for punters who put thought behind their money. If you just bet on e-sport for the fun, making the stream that more exciting for example, then you can definitely enjoy mutual betting as well. Whether you make your own markets, or fill the opposite bet of enthusiasts from around the world.

Another downside that should be mentioned is the possibility of market manipulation, although rare cases of this has been officially reported, it is something the exchanges are keeping an eye on at all times to ensure a fair environment for everyone.

Lastly, if you are an arbitrage bettor then you should be very careful about using an exchange rather than a regular sportsbook. At a bookmaker your odds will not, and can not, change after your bet is placed. When mutually placing wagers however, your probability may go higher or lower until the event is closed and awaiting outcome. This will often result in the arbitrage wager to fail, since you cannot be certain what odds you will get in the end and therefore you cannot compute how much you should bet on each possible outcome.

If you have not already been trying out this unique type of placing online esport bets, then i definitely recommend you give it a whirl. You will always find the market your looking for, and if you for mysterious cannot, then create it yourself and see how many are interested in it!

Good luck!

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