Peer to Peer Betting: How Betting Exchanges Work
Peer to peer betting is wagering directly against other people instead of against a bookmaker. A betting exchange matches one person who backs an outcome with another who bets against it, and the exchange charges a commission. This guide explains how matching and commission work, how exchanges differ from sportsbooks, and which US exchanges were operating as of October 2026.
Key takeaways
- On a betting exchange, users set the odds by posting offers. The exchange is not the other side of your bet.
- “Back” means betting something will happen. “Lay” means betting it will not.
- Exchanges usually earn a commission on winnings, while sportsbooks earn through a margin built into their odds.
- The US exchange scene changed a lot in 2026, and availability varies by state.
- On-chain P2P exchanges add smart contract risk and may not be open to US users.
What is peer to peer betting?
Peer to peer betting (also called P2P betting or peer to peer sports betting) lets bettors take bets from each other. Wikipedia defines a betting exchange as “a marketplace for customers to bet on the outcome of discrete events.” Customers, not a house, set the market. The company running the exchange hosts the marketplace and keeps a fee.
How do back and lay bets work?
“Betting exchanges offer the opportunity for anyone to both back and lay.” Here is the usual flow.
- Choose an outcome. For example, a team to win a game.
- Back or lay. A backer bets the team wins. A layer bets the team does not win, and so acts like the bookmaker for that bet.
- Post or take an offer. You can name your own odds and stake, or accept a price already waiting in the market.
- Get matched. Your order fills only when another user takes the other side. This is why the bets are called matched bets.
- Settle. After the event, the winner is paid and the exchange takes its commission.
Laying carries a bigger risk than backing, because of liability, which Wikipedia describes as “the amount one can lose in the worst-case scenario.” As an illustration only: laying $10 at decimal odds of 5.0 wins you $10 if the outcome fails, but risks $40 if it happens. That is $10 times the 4.0 gap between the odds and your stake.
How does commission work on a betting exchange?
Wikipedia says exchanges “normally generate revenue by charging a small commission on winning bets,” and nothing is taken on net losses. A 2026 article on the exchange ProphetX says it “charges a commission on net winnings only,” that losing trades and cancelled unmatched orders carry no fee, and that launch reporting put the rate at roughly 1 to 2 percent on winning straight trades. Those rates are new and may change, so check the current fee schedule. Rates have varied by place and time. In a September 2020 report, Betfair charged New Jersey customers 12% commission, against about 5% for most UK bettors.
How is a betting exchange different from a sportsbook?
A sportsbook sets its own odds and earns through margin. Wikipedia notes that “bookmaker operators generate revenue by offering less efficient odds,” while exchanges typically offer better odds partly because they have smaller overrounds. Wikipedia also says exchanges let bettors place unrestricted stakes, which bookmakers often limit for winning customers. The table compares three models.
| Feature | Sportsbook | Betting exchange | On-chain P2P exchange |
|---|---|---|---|
| Who is on the other side | The operator | Another user | Another user |
| Who sets odds | The operator | Users posting offers | Users posting offers, or a pool formula |
| How the operator earns | Margin in the odds | Commission on winnings | Fees set by the platform |
| Holds your money | The operator | The operator or a clearing house | Smart contract escrow |
| Regulation (US) | State licenses | State rules or federal CFTC oversight, depending on the product | Often none; some platforms exclude US users |
| Main extra risk | Account limits | Unmatched bets, lay liability | Smart contract bugs, unrecoverable transfers |
Which US betting exchanges are operating?
The picture below is dated October 9, 2026, and it is moving. Check each company’s own site and your state’s rules.
- ProphetX. On June 11, 2026, the CFTC cleared ProphetX to operate as both a Designated Contract Market and a Derivatives Clearing Organization, according to Pikkit. That article, dated July 6, 2026, described the exchange as “a peer-to-peer prediction market exchange, not a sportsbook” and said it was available in 49 states, everywhere except Nevada. On October 8, 2026, DeFi Rate reported that ProphetX had stopped sports contracts in Connecticut.
- Novig. Gaming Intelligence reported on June 17, 2026 that the CFTC had approved Ludlow Exchange, operating as Novig, as a designated contract market, with contracts open to people over 21. We could not confirm which states Novig serves as of October 2026.
- Sporttrade. It left the US online sports betting market in 2026. Players in New Jersey had until May 25 to withdraw, and access ended June 26, 2026. Its website now says it is “re-entering the market soon.” It applied to the CFTC in February 2026, and We could not confirm a decision.
- Betfair. Betfair’s New Jersey exchange stopped taking wagers on October 1, 2020, after a FanDuel executive said it never hit “the critical mass needed for it to be viable.” We found no current US exchange from Betfair.
Sports event contracts are also in court. A September 2026 legal analysis says the core question is “whether federal derivatives law displaces state gambling law for these products.” This is not legal advice. Laws differ by state, so check yours.
What are on-chain P2P betting exchanges?
An on-chain exchange puts the order book and escrow on a blockchain. SX Bet is one example. Its guide says it treats every market as two outcomes, runs the order book, escrows both sides of every bet, and settles in USDC. As of May 2026, it listed 0% on single bets and 5% on parlay profit. SX Bet’s site says it “is not available in the United States or other prohibited jurisdictions.” Our guide to DeFi sports betting covers the full set of on-chain models. Prediction markets work in a similar way, as explained in what a prediction market is.
What are the risks of peer to peer betting?
- No match. Your order fills only when another user matches it, so thin markets can leave bets unfilled.
- Lay liability. Laying a long shot can risk many times the stake you win.
- Legal change. Court cases and state orders can close a product in your state quickly, as Connecticut showed.
- Smart contract risk. On-chain bets depend on code, and SX Bet’s help center warns that tokens sent to the wrong address or network cannot be recovered.
- Fee changes. New exchanges may change commission rates.
- Addiction risk. Betting any way can become a problem.
Frequently asked questions
What is peer to peer betting?
It is betting against other users instead of a bookmaker. A betting exchange matches the two sides and charges a commission.
Is P2P betting legal in the US?
It depends on the product and the state. Some exchanges now operate under CFTC oversight, but states and courts are still disputing sports event contracts. Check your local law.
What does back and lay mean?
Back means you bet an outcome will happen. Lay means you bet it will not, which makes you the one paying out if it does.
How do betting exchanges make money?
Exchanges normally charge a small commission on winning bets. Sportsbooks earn through the margin in their odds.
Is there a crypto betting exchange?
Yes. SX Bet describes itself as a blockchain betting exchange and settles bets in USDC, but its site says it is not available in the United States.
Gambling involves risk and you can lose money. Betting is for adults, 21+ where applicable. If it stops being fun, help is available: in the US, call or text 1-800-MY-RESET (1-800-697-3738), the National Council on Problem Gambling helpline. See our responsible gambling page. You can also read about how Polymarket works.
Sources
- Wikipedia: Betting exchange
- Pikkit: ProphetX nationwide (July 6, 2026)
- DeFi Rate: Connecticut restrictions (October 8, 2026)
- Gaming Intelligence: Novig approval (June 17, 2026)
- Yogonet: Sporttrade exit (May 19, 2026)
- Sporttrade
- Thoroughbred Daily News: Betfair NJ exchange (September 11, 2020)
- The Coin Republic (September 24, 2026)
- SX Bet: exchanges guide
- SX Bet
- SX Bet help center
- National Council on Problem Gambling helpline
