Who You're Trading Against
A sportsbook sets prices with a built-in margin (~4.5% on standard lines) and is your counterparty — it profits when you lose, and it limits or bans customers who win consistently. An event exchange matches you against other traders; the venue earns fees regardless of who wins, so winners are customers to keep, not risks to manage. For skilled bettors, the no-ban-risk difference alone is decisive.
Pricing and Costs
Sportsbook vig applies to every bet, win or lose, invisible in the odds. Exchange costs are the spread plus explicit fees — often cheaper on liquid markets, sometimes pricier on thin ones. Exchanges also let you exit positions mid-event at market price, a structural advantage over cash-out buttons priced with fresh margin. What sportsbooks win on: breadth (thousands of props and parlays) and instant liquidity at any moment.
Legal and Tax Treatment
Regulated event exchanges operate under federal derivatives law with brokerage-style 1099 reporting; sportsbook winnings follow gambling tax rules (W-2G thresholds, itemization-dependent loss deductions). Sports event contracts on regulated exchanges now cover major US sports in many states — a live regulatory frontier that has already made exchanges a genuine sportsbook alternative for main-line markets.