Basically you bet on team A(fav) to win with $/btc, and 'hedge' your bet with betting items on team B(underdog)
That makes sense, gotta pay a decent amount of vig but theres no real risk there.
Basically what I'm asking is, if a gun is "worth" $100, are there people who are actually paying $100 for it, or is it just kind of an arbitrary pricing system to facilitate betting?
Prices for skins under 400$ are based off the steam market; and for RMT, skins are usually sold at 60 ~ 80% of the market's price. High tier knives, however, are a goddamn hassle to deal with (omg rare pattern worth 50% more). Some of these knives can be in the thousands of dollars. However, there are markets for trading, such as the /r/GlobalOffensiveTrade subreddit. Just make sure you find a trusted middleman from Steamrep and be wary of scams.
Example case you just won 300$ of asiimovs from a huge bet (5 asiimovs at 60 each). Lets say We selling for bitcoin here, 45- 50 usd each. You would set up a trade with a person who will agree with the price, find a middleman from steamrep, and you would receive the money in exchange for the skins you won.
edit: magic beat me to it