Sports betting and crypto glossary

Words. There are lots of them. If your background is crypto, sports betting words might be confusing. If your background is sports betting, crypto words might be confusing. Let this serve as a simple explanation of the terms you are most likely to come across.

Let us know in our Discord server or on Twitter if there are any other terms you have come across in our docs or in the wild and we will add them here.

Stake

Your stake is the amount of money you are placing on a bet. It cannot change once the bet has been placed unless you decide to increase your risk by placing another bet. For most bets, this is your total risk. However, for lay bets (which will be covered later), traditional websites define the laying bettor’s “stake” as the “backer’s stake” which means it scales with the laying stake AND odds. On the Purebet UI, we have a toggle option to swap the bet slip to a “new” mode where lay bets total risk is the input. This is usually more intuitive to new users but we also have the “traditional” mode for anyone who likes the old version.

Odds

Odds specify the ratio of your payout compared to the amount of money you risk. They roughly represent the wider market’s expectation of the outcome winning. There are many types of odds but the most common are decimal (aka European), American, and fractional.

Decimal odds = 1/probability = return/stake.

Fractional odds = 1-decimal odds (expressed as a fraction) = profit/stake.

American odds are expressed as a positive or negative integer depending if the implied probability is less or greater than 50%, respectively. If <50%, american odds = “+”(decimal odds-1)*100 = the amount of profit if you staked 100.

If >50%, american odds = “-”(100)/(decimal odds-1) = the amount you need to stake to get a profit of 100.

Overround AKA Vig

Overround (known as “vig” in the USA), is a measure of the competitiveness of the odds offered by a venue. It is calculated by adding together the implied probabilities of each selection in the market. If this adds to 100%, the venue has 0% edge. For example, offering heads and tails for 2.0). Normally it will add to more than 100%. The greater than 100%, the more the house edge and the worse deal it is for bettors. For example, offering 1.95 for heads and tails is better for the bettor than offering 1.8 for both sides. It is unlikely a single venue would offer less than 100% overround, but by comparing multiple venues it is possible. This creates an arbitrage opportunity — where the bettor can profit no matter the outcome. For example, one venue offering 2.1 on heads and another offering 2.1 on tails. Betting $100 on each will win $10 no matter the outcome. This is why betting at multiple venues is important — you have a much lower effective overround. And it is even better if they are all in one place like at Purebet.

Handicap

A handicap bet is a bet on a team to win once a set handicap has been applied to the final result. The handicap is applied only once to the team you bet on. If a game ends 25–12 to the home team, and the home team was on -20 handicap, the market score would be 5–12 so the away selection would be the winner. If the home handicap was -5, the market score would be 20–12 so the home selection would be the winner. If the scores are tied ONCE THE HANDICAP HAS BEEN APPLIED, the market is void and all bets refunded (e.g. if the same game had a home handicap of -13, the market score would be 12–12). Again, in soccer, only the 90 minute score is used. In soccer, a 0 handicap is sometimes used, this means it is a bet on a team to win, but if it ends in a draw, the bet is a refund.

Total

This is a bet on the total number of points scored by both teams combined. You bet over or under the specified line. If the final number is greater than the line, over bets win and under bets lose. If the line ends in .5, the bet must settle as over or under since scoring half a point is impossible. If the line ends in .0, it is possible for the total to end at that exact number. In this case, all bets are refunded.

Orderbook

An orderbook is traditionally used in financial markets for participants to show the price at which they are willing to buy or sell an asset. You can instantly buy an asset at the top price someone is willing to sell for and vice versa. An orderbook can also be used in sports betting, where the price of assets are replaced by the odds of outcomes.

Back Bet

This is a “normal” bet where you are betting on the outcome to win. This is what bets on sportsbooks are and they are shown in green on the Purebet UI. We have also simplified 2-way markets so that both sides display as back bets.

Lay bet

This is betting AGAINST the outcome on the bet slip. This is used on 3-way markets like home-draw-away markets in soccer and in multi-way markets like next president. This allows users to bet on a candidate to win the election, but also bet on a candidate NOT to be the next president. These are shown in red on the Purebet UI. They do not show on 2-way markets as one side NOT to win is the same as the other side to win, so we handle that on the backend to make it simpler for users.

KYC

Know your customer. This is the process where a business requires all users to send proof of their identity, residency, and income in order to do business with them. This is carried out by centralised entities who deal with customers’ funds, like cryptocurrency exchanges and sportsbooks. Sportsbooks tend to use this as an excuse not to pay out withdrawal requests from winning players. Decentralised venues, like Purebet, do not ask for KYC information.

A sportsbook is a venue which takes bets directly from users. They set their own odds, take on the liabilities of paying out winning bets, and choose which bets to accept from which users. Users who consistently show behaviour which indicates they will make money over the long term are banned from sportsbooks.

Exchange

Sports betting exchanges facilitate the matching of opposing bets between different users using an orderbook. They provide the infrastructure but do not take on any risk for themselves. All bettors are accepted at exchanges.

This is a type of betting where users put funds into a 2 sided pool. Whoever bet on the winning side of the pool is paid out by the funds of those on the losing side. The odds of the outcomes vary over time and are not fixed until the betting closes. This means you could bet on an outcome when the balance in the pool is 1:1 so you think you will double your money if your pick wins, but if another player comes along and bets the same side as you with a much bigger stake, your payout will be reduced. It is undesirable to most users to have their payouts changing after they have bet.

These are used only on exchanges. Bets on sportsbooks are matched as soon as they are confirmed as placed. On an exchange, an order must match up against an opposing bet at the same odds. Unmatched bets sit in the orderbook until another user matches them or the market closes. Once an opposing bet is placed, both bets become matched and locked in until the event is settled.

Like on financial asset exchanges, maker orders are those which rest in the orderbook without being matched. Since sports betting exchanges do not involve the transfer of different assets, anyone can be a maker on any side of the outcome, without having an “asset” in their “inventory”.

These are orders which bet into the maker orders in the orderbook. They instantly match and get locked in. This is the type of order most people involved in sports betting will place.

In a sports betting exchange, liquidity is the amount available within the orderbook (near fair odds) which you can bet against. Less popular events tend to have lower liquidity. Usually, this liquidity is from unmatched orders of other users. However, since Purebet is an aggregator on top of an exchange, we can show liquidity from other protocols which do not rely on other user orders.

This is a service which brings together different sources of liquidity into one interface or execution environment. This could be a DEX aggregator like jup.ag or a sports betting liquidity aggregator like Purebet (the first of its kind). The liquidity aggregator allows users to always get the best price for their swap or best odds for their bet, without having to check each source of liquidity one-by-one.

A term for a betting market for non-sporting events, such as elections, financial or economic forecasts, or almost anything imaginable as long as it has a verifiable outcome. These can be hosted on Purebet since it is built on an on-chain exchange engine.

A type of options market where the price of the options expires to $1 or $0 depending on the price of the underlying asset at expiry. Essentially an Over/Under market for the price of an asset. These are also possible to be hosted on Purebet.

Slippage is a term used to describe the difference in effective price paid when executing a large order compared to the price shown for executing a very small order. On an asset exchange, this is because fewer assets are bought/sold at the top price in the orderbook compared to further down the book. This means large taker orders must move to worse prices in order to get matched. This is similar to sports betting exchanges: large taker stakes must take lower odds in order to get their full stake matched instantly.

An automated market maker is a program which facilitates the trading of assets based on 2 assets being in a pool. Each asset is priced in terms of the other and the price depends on the quantity of each asset within the pool. For example, a pool could have SOL and USDC in it. This allows users to swap SOL to USDC or USDC to SOL. The AMM was created to allow the swapping of low liquidity assets without the need of a market making firm to provide liquidity on an orderbook, and always allow users to buy or sell assets at any time. An example of an AMM model is the x*y=k curve model made popular by Uniswap.

A virtual automated market maker is a program which acts like an AMM but uses a virtual pool rather than a real pool of assets. The pricing for buying and selling the assets are based on similar models used in AMMs. These are used by other sports betting protocols to price games and always allow users to bet on any events, without waiting on another user to provide liquidity in an orderbook.

A blockchain is a network of computers, or nodes, which work together to keep a record of all transactions. All transactions and nodes must follow specific rules to be valid and in agreement. The network is not controlled by any one person. Valid transactions are placed in blocks and, once validated, the block is then added on top of previous blocks forming a chain. Generally, blocks within the chain cannot be removed or edited so the transactions are permanent and cannot be reversed.

A wallet is a piece of software used for interacting with a blockchain. It allows users access to their assets and helps them construct the data structure needed to transfer funds and interact with programs on the blockchain.

When you first set up your wallet, you will be given a list of 12 or 24 words. This is known as your seed phrase. This list of words is the only thing that allows you to recover your wallet in the event of an error or moving to a new device. The seed phrase is used by the new wallet to generate the list of private keys associated with the wallet you used before. Anyone who has access to your seed phrase can generate your private keys and steal your funds. Your seed phrase should be stored securely and offline there is no unauthorised access, but you must also always have access to it because a lost seed phrase means the access to your wallet might be lost in the future.

This is a large number which is used to “sign” transactions. Possession of this number is proof you own the address and tells the blockchain you are allowed to move the funds or carry out the transaction that you are trying to do. Each public key is linked to a private key (aka address) on a strict 1:1 basis. This inner workings of signing a transaction is handled by your wallet interface. The inner workings of the public-private key links are handled by complex maths and the blockchain.

This is a large number which identifies your wallet on the blockchain. On Solana and EVM chains, this never changes. It is always public and allows the blockchain to track the balances of every transaction. You give someone your public key in order to receive funds from them or to an on-chain program or smart contract to interact with it. Any interaction which involves moving funds from a public key must be signed by the corresponding private key.

Address is a more casual term for your public key.

Most blockchains require transactions to pay a fee in order to be included within the chain. This fee is usually used to pay the block producers who verify valid transactions. Purebet is built on Solana which is one of the lowest fee blockchains possible. This means that $1 of SOL can pay for hundreds or thousands of bets.

Due to the architecture of the Solana blockchain, each paired bet at Purebet creates an “account”. All accounts on Solana need to pay “rent” to exist. Accounts can avoid paying rent by having a certain amount of SOL associated with them. This amount increases as the data within the account increases. Once the account is closed, the SOL used to exempt it from rent is returned. Purebet is specifically designed to use a small amount of data and we automatically return rent exemption SOL to the user’s account once the sporting event is over. Only maker orders are required to pay rent exemption, and this is refunded automatically.

Join our Discord: https://discord.gg/stPns8uA43 .

Follow on Twitter: https://twitter.com/Purebet_io .

This article was originally published on January 7th, 2023