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Just what the heck is a bet exchange? Unless you are from the United Kingdom—or a hardcore sports bettor—you might not know about this alternative way to make sports wagers. Bet exchanges are wildly popular in the UK.

Bet exchanges first appeared on the scene in early 2000. Actually, bet exchanges simply enhanced an age-old tradition—person to person betting. A betting exchange makes its money by connecting bettors and taking a commission of the net winnings.

The betting exchange you use—if you decide to use one—is just a p2p network. Typically, the odds found at a bet exchange are 20 percent lower than those found at a traditional online sportsbook.

Betfair operates one of the largest Internet betting exchanges. They change a modest 5 percent commission on all net winnings. Betfair is a betting exchange and not an online sportsbook. This is a common mistake among sports bettors.

It might be easiest to think of a betting exchange like the Stock Market. In order to buy stocks, someone else has to be willing to sell them at the price you willing to buy them at and vise versa. An online sportsbook is like a store. You walk in, and they tell you the price of what you want to do. There's no negotiating and the price is close to the same no matter where you go.

Millions of wagers have been placed through bet exchanges, and many sports bettors swear by them. They like the fact that the odds are set by other individuals.

If you live in the United States, betting exchanges might not be an option for you. Betfair, which is the largest Internet betting exchange doesn't accept business from those in the United States. In fact, they never have. A strong majority of their business come from UK sports bettors.

The resonating manta of all sports betting exchanges is that you'll get odds at 20 percent lower than a traditional online sportsbook and thus have more money in your pocket at the end of the day. In fact, I've seen claims of 200 percent differences.

Whether or not a sports betting exchange is the best option is up for you to decide. It might be a good few minutes spent to check out a couple sports betting exchanges. Some also offer casino games and poker. Make sure you use a licensed and government backed betting exchange.

About the Author: The author writes articles on many topics including sportsbetting, sportsbook review, and paris sportifs.