# Betting exchange

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Canonical: https://novigapi.com/learn/betting-exchange

A betting exchange is a marketplace where bettors trade against each other at prices they set, while the exchange takes a fee instead of acting as the bookmaker.

A betting exchange matches bettors with opposite views. One person backs an outcome; another takes the other side. The exchange never takes a position, so it does not care who wins. It earns money from a commission or trading fee. Because prices come from competing traders rather than a single book's margin, exchange prices on popular markets are usually close to fair, and sharp bettors are not limited for winning.

## How it works

Traditional exchanges such as Betfair use back and lay. Backing is betting that something happens; laying is betting that it does not, which means you act as the bookmaker for that bet. If you lay $100 at decimal 2.50, you collect $100 if the outcome fails and pay $150 if it happens, your liability. Exchanges often charge commission on net winnings in a market. US sports exchanges and prediction markets use a Yes and No contract model instead, which expresses the same idea in prices between 0 and 1.

## Worked example

Backing a 40% outcome on a back-and-lay exchange and the same position on Novig, with a $100 stake:

Same view, two exchange formats

| Item | Back at decimal 2.50 | Buy Yes at 40% (250 contracts) |
| --- | --- | --- |
| Stake | $100.00 | $100.00 |
| Gross profit if it wins | $150.00 | $150.00 |
| Fee | Commission on net winnings, rate varies | Pregame game market: $0.00; live: $3.60 |
| Counterparty | A layer, liable for $150 | A trader holding No, who paid $150 |


```
Novig live fee = 0.06 x 0.40 x 0.60 x 250 = $3.60
```
That is 3.6% of the stake, or 2.4% of the gross profit, and it is paid when the trade fills, win or lose.

The [Novig fee calculator](https://novigapi.com/novig-fee-calculator) gives the fee on any fill.

## On Novig

Novig works as a US sports exchange built on event contracts. Its book holds bids only: you buy Yes by matching a resting No bid, so the Yes ask is 1 minus the best No bid. Per [Novig trading fees](https://docs.novig.com/api/concepts/fees) (checked 12 Nov 2026), takers pay 0.06 x P x (1 - P) per contract, game markets charge only while the event is live, and makers never pay and earn a credit of 25% of the taker's fee on live game fills. Parlays are handled separately, through request for quote.

## Common mistakes

- Forgetting liability when laying. Laying a long shot can cost many times the amount you collect.
- Comparing fees on different bases. A commission on net winnings and a fee per contract are not the same percentage.
- Assuming every market is liquid. Exchange depth varies widely by sport and market type.

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