The types of betting sites, and how each one prices and settles

There are six kinds of place a US bettor can put money on sport, and they differ in one question: who is on the other side of your bet. A state-licensed sportsbook takes the other side itself and builds its margin into the price. An exchange or prediction market matches you with another customer and charges a fee. A DFS pick'em site runs a fantasy contest with fixed payout multipliers. Sweepstakes sites route the bet through a promotional currency, and offshore books take it outside any US regulator. Knowing which one you are using tells you how the price is made, how the bet settles, and what happens if something goes wrong.

State-licensed sportsbooks

DraftKings, FanDuel, Caesars, BetMGM and the rest are licensed state by state and are the counterparty to every bet. They set a price on each side so the two implied probabilities add up to more than 100%; the excess is the book's margin, explained in hold and vig. Settlement follows the book's own house rules, which decide things like whether overtime counts and what happens when a pitcher is scratched — see sportsbook house rules. Because the book carries the risk, it can and does cap what a winning customer may stake; keeping accounts open covers that. What you get in return is a state regulator to complain to and state rules on how player funds are held.

Betting exchanges

On an exchange you either back an outcome or lay it (bet that it won't happen), and the venue simply matches backers with layers. It has no position to protect, so it charges a commission or a per-trade fee instead of shading the price. That is the model the exchanges guide describes, and lay betting explains the lay side. In the US this model has moved almost entirely under federal futures regulation. Sporttrade, which ran a New Jersey-licensed exchange, says on its own site that all wagering ceased on May 25, 2026 and that it has applied to the CFTC for exchange and clearing registration. Novig (Ludlow Exchange, designated by the CFTC on June 16, 2026) and ProphetX (which announced CFTC approval as an exchange and clearinghouse on June 11, 2026) now run peer-to-peer sports markets under CFTC regulation. Betfair, the exchange most UK matched-betting guides are written around, is not open to most US bettors.

Prediction markets

Kalshi and Polymarket US are designated contract markets regulated by the Commodity Futures Trading Commission. You buy a contract that pays $1 if an outcome happens, at a price in cents that reads directly as a probability: 62¢ is 62%. The price comes from an order book of other traders, the venue charges a trading fee when your order fills, and the contract settles under the venue's written contract rules rather than a sportsbook's house rules. The federal-versus-state fight over sports contracts is live and dated in prediction markets for sports betting; the fee formula is in Kalshi fees explained.

DFS pick'em

Pick'em apps such as PrizePicks and Underdog are run as fantasy contests: you choose more or less on several player stat lines and are paid a fixed multiple of your entry if enough of them hit. There are no odds per pick, so the price is hidden in the multiplier: an entry paying 3× on two picks breaks even only if each pick hits √(1/3) = 57.7% of the time, which is −137 per pick. Compare that with the prop's price at a sportsbook before you enter. Several states regulate or restrict these formats differently from ordinary fantasy contests, so availability varies; the operator's own terms list where it runs.

Sweepstakes sportsbooks

A sweepstakes site sells a play currency and gives away a second, redeemable currency with it, and you bet with the redeemable one. The structure exists to avoid being a licensed sportsbook, and states have been closing it off. California's AB 831, signed on October 11, 2025, makes it unlawful to operate or support online sweepstakes games that simulate gambling, and its definition expressly includes sports wagering; several other states have passed or proposed similar bans. Redemption terms, identity checks and dispute handling are set by the operator, not a gaming regulator.

Why the type matters for a hedge

Two legs of a hedge can sit on different kinds of venue, and each settles on its own rules. A sportsbook might void a game postponed past its window while a prediction market resolves the same game at a price it sets, or a book might count overtime where a contract names regulation only. Settlement rules for overtime and retirements walks through where they part.

Seeing every venue in one place

The Odds Board lays the sportsbooks and the exchanges TrueEdge collects side by side for each market, so you can see at a glance which kind of venue is paying best. Plays where both legs sit on exchanges get their own screen, the Order Book. The odds board walkthrough shows how to read a row.