What is a sports swap bet?

In a swap bet we make an agreement to exchange the difference between a ‘fixed’ odds bet and a ‘floating’ odds bet at a number of given points in time in the future until the final expiry date. In reality we do not receive the bets at each point in time. Instead we have a ‘cash settlement’ meaning we exchange the profit and loss given by the difference between the agreed odds, and the odds at the expiry date. The agreement can be traded at any time before the expiry date.

Here is an example.

• In this kind of bet we make an agreement to swap odds.
• For example, my bookmaker says to me, I will give you odds of $1.80-1 for the win for each of the next 10 Tottenham home games.
• For each dollar that you bet, we will exchange the difference in profit and loss according to the actual odds at the start of each game, i.e., if the odds are higher you will profit, if the odds are lower, you will incur a loss.
• One could also take the other side of the swap, and take the floating odds at the start of each game in exchange for offering fixed odds. In this scenario profits would be reversed.