In the middle of a chaotic week — perhaps the biggest in company history up until this point — preparations are moving toward a Prophet Exchange launch in New Jersey. Still in a testing phase with the New Jersey Division of Gaming Enforcement (NJDGE), Prophet Exchange is ready to go on the product side to launch its new platform. This is to say, the days until exchange betting is part of the sports betting ecosystem are numbered, and Prophet Exchange is poised to be one of the first, if not the first, betting exchanges on the market.
Unfortunately, the prospect of a Super Bowl week launch grows dimmer by the hour. However, Prophet Exchange CEO Dean Sisun stoically described this week by saying, “Each week is more important than the last.”
Both he and COO Jake Benzaquen participated in a 30-minute interview with Gaming Today as they anxiously await the launch of their platform.
Update: ProphetExchange has launched in New Jersey in time for the 2022 NFL season, according to a tweet on Monday, Aug. 29 from ESPN’s David Purdum.
“We are there on the product side and just waiting on sign-off (from the DGE),” Benzaquen said.
Benzaquen emphasized the duo’s sports betting experience as key to the company’s culture and mission.
“What we really hang our hats on is that we are sports bettors,” he said. “(Prophet Exchange) is a complete sports betting environment. We do not come from a financial trading background or anything stock-related. We are laser-focused on the sports betting community here.”
The team at Prophet Exchange isn’t dwelling on what is out of its control, including DGE approval and what its competitors are up to. But with Sporttrade, a competing sports betting exchange, also preparing for launch in New Jersey, the race is on for supremacy in the space.
Indiana is next on Prophet Exchange’s road map, and Sisun and Benzaquen’s eyes are on even more states in the expanding U.S. market.
History Of Betting Exchanges And Where They Fit In The U.S.
Bettors are accustomed to going to their sportsbook apps to place a bet, whether it is a straight bet, parlay, or prop. Here’s where things get interesting. What if, instead of paying a vig of -110 or worse for straight bets, it was +100 both ways? Sounds pretty good, right? Well, that is the reality with sports betting exchanges.
The way these exchanges work is a user can pick any game and spread they want and offer a bet. Once a bet is offered, it is posted onto the exchange platform. In order for the bet to be active, another bettor must take the inverse of the bet.
For instance, if you want to bet the Rams to win the Super Bowl -3.5 (+100), you can try to do so on an exchange. Another bettor must be willing to claim that action by betting Bengals +3.5 (+100).
While the frequency with which bets are accepted on exchanges will be largely dependent on liquidity — i.e. how many people and how much money are participating in the market — bettors will have an 8-10% edge when compared to wagering at sportsbooks.
“I don’t see there being any reason in the world, other than a far off-market price or a teaser, to use a sportsbook rather than an exchange,” Sisun stated.
In terms of market capitalization, the sky could be the limit for Prophet Exchange. Sisun was keen to look back on the United Kingdom’s market as a model for what could happen in the U.S.
Sisun said, “In terms of handle, I think 20-25% is a fair expectation” for market share to be occupied by exchanges.
Betfair, the dominant betting exchange in the U.K., launched in May 1999 with just 1 million pounds of funding. It is now valued at $40 billion and owns around 20% of the U.K. market.
Prophet Exchange, Sharps, And The Sports Betting Ecosystem
“People who are doing this for profit are not the players we want” — Jason Robins CEO of DraftKings, November 30th, 2021.
While he tried to walk back that comment, Robins’ intention was clear: DraftKings is not welcoming to sharp bettors, those who win over the long term. Sharps, on the other hand, will be the lifeblood of Prophet Exchange.
Prophet Exchange will make money only from for-profit players — a massive differentiator between exchanges and sportsbooks. Prophet Exchange’s revenue will come from money taken from a net percentage of winnings. Long-term winners in the top .1% of certain stakes and Return on Investment thresholds will pay some net profit to fees. However, these are just drops in a bucket when compared to the vig top performers will save by using on the platform.
Even casual bettors, though, can benefit from exchanges.
“We are a permanent promotions product with every bet across the board 8-10% better than you can get at a sportsbook,” Sisun said
“Our ethos is that the Exchange is for everyone,” Benzaquen added. “We are ultimately the best straight bet platform possible.”
There is room in the marketplace for both sportsbooks and exchanges, however.
“I think a lot of people make the mistake of the exchange being supplementary to a sportsbook, when in reality it is complementary,” Sisun said. “I like to point to history and say it predates us. It is exactly what is going on in the U.K. Betfair right now accounts for over 20% of all straight bet volume in the country. In reality, half of sportsbooks revenue comes from parlays and teasers.
“Check out what happened with the numbers in the early 2000s when Betfair came into the market. Sportsbooks handle went down but the revenue went up because they were focusing more on their parlays and teasers. Straight bets are their lowest-grossing product.”
The Future Of Exchange Betting — Player Props, Futures, Promotions, And More
Prophet Exchange will offer player props and future bets at some point, although not immediately.
The example we discussed was an Odell Beckham Jr. anytime touchdown scorer prop. How might that be offered on an exchange?
Well, if someone wanted to put up Odell Beckham Jr. to score a touchdown +200, another bettor would have to cover the inverse of the “yes” by taking “no” at -200.
This is obviously different than what sportsbooks do now. “No” is rarely, if ever, offered on touchdown scorer props, and even the “yes” has significant vig for bettors to pay.
“We want to offer ‘no’ whenever possible,” Sisun said.
This is going to be a fun opportunity for bettors, hopefully by next NFL season.
Exchanges are not expected to offer promotions and bonuses to the extent sportsbooks do. However, that does not mean promotions will be totally absent from the platform.
In addition to the effective bonus he says happens every time a bet is placed on his exchange, Sisun said, “We are going to have promotions. We are going to get very creative with our promotions.”
Unfortunately, exchange platforms don’t necessarily lend themselves to parlays, which will not be a part of Prophet Exchange anytime soon.
“We will not have them (parlays) for a while, if at all,” Sisun said.
If you are looking to pre-register for Prophet Exchange, they are offering a $200 signup bonus for players in New Jersey. Go to ProphetBettingExchange.com
Prophet Exchange Betting Going Forward
Prophet Exchange has a ton for us to look forward to in 2022. From no-vig straight bets to player props, futures, promotions, and more! The stage is set for Prophet Exchange founders Dean Sisun and Jake Benzaquen to make their mark in sports betting.