Apps like Robinhood and Coinbase have made investing accessible to customers with no financial background. Neither app requires users to understand stocks or cryptocurrencies. Customers don’t have to know how to use candlestick patterns. All they need to know is to buy low and sell high.
Those apps have prepared sports betting markets for betting exchanges like Sporttrade, a peer-to-peer betting platform expected to launch in New Jersey, Colorado, and other markets in 2022. It’ll be among the first legal, licensed sports betting exchanges in any American market. Sporttrade will give bettors new ways to bet and sportsbooks a new type of competitor to face.
Gaming Today spoke with Sporttrade founder Alex Kane about his 2022 launch plans and how his future customers have been educated on his core offering by companies outside of the gambling industry.
Bringing The Financial Markets To Sports Betting
Buy low, sell high is intuitive. Stock traders make money if they sell a stock at a higher price than they buy it at. Betting exchanges allow bettors to use the same principles to place sports wagers.
On a betting exchange, bettors can buy sports wagers at prices between $1 and $99. If bettors are right, then they’ll get $100. If bettors are wrong, then they get nothing. Bettors can also sell their trades before they’re settled for smaller gains.
That symmetry with financial markets means Sporttrade doesn’t have to do as much consumer education. That’s, in part, because Sporttrade will target day traders, avid bettors (a more sophisticated group of players than typical recreational bettors), and sharps.
“I think the [customer] tier that we’re most excited about that no one has really thought about is the day trader tier, where [they’re] like, ‘it’s trading sports,’” Kane said. “So you can make a two-way [bet] on the Mets or the Rangers, and you can do everything you do in trading … on our platform.”
Traditional sportsbooks target recreational bettors and some, like DraftKings, have even publicly stated they’re not welcoming to winning players. Kane sees an opportunity in what he calls “level-up customers,” sports bettors who are price sensitive, shop for the best odds, and wager in higher volumes. While these avid bettors are not necessarily professional or “sharp”, they’re not desirable to traditional books. Kane envisions Sporttrade as a natural home for these more sophisticated bettors.
“Sharp bettors are going to find their way onto the exchange,” Kane said. “Avid bettors are going to find themselves on the exchange, whether it’s by choice or they’re just not able to use any other legal options because they’re not losing quick enough according to the sportsbooks.”
Sporttrade’s Preliminary State Launch Plans
Sporttrade is going through the licensing process in several states. New Jersey will be its first market, and Colorado will likely be its second, both established states. The company is not pouncing on potential new markets the way traditional sportsbooks do. Sporttrade will likely limit itself to established markets with educated bettors and wait for emerging markets to mature before entering.
“I think if we were a sportsbook,” Kane said, “we would probably be looking to launch in like Ohio first, and North Carolina, then Georgia. And we’d probably already be spending there to try to build up awareness.”
Since Sporttrade uses a different sports betting model than traditional sportsbooks, customers who understand sports betting won’t have to be educated as thoroughly as new bettors.
“A state like New Jersey, where you’re already going to enter a market [with] such mature, saturated volumes, is actually going to help us,” Kane said, “because a significant part of our venue’s volumes are going to come from folks that are arbitraging free bets, matched bets, promos.”
Sporttrade doesn’t set a line that bettors try to beat. Instead, bettors play against each other, so Sporttrade bettors will be able to wager as much as they’d like at whichever prices the market will accept. Instead of charging -110 vig on a losing bet, Sporttrade will charge a small fee on each winning trade. It gives sports bettors who are troublesome to traditional books a legal place to bet.
So, Sporttrade will complement traditional books as much as it competes with them.
Sporttrade’s Expected Markets And Future
Alex Kane has his eyes on emerging markets that will give startups the best chances of entering the industry. Although he doesn’t expect to be among the first movers in these markets, these states remain interesting long-term opportunities for Sporttrade.
“North Carolina is of unique interest to us,” Kane said. “I know that they have been kind of flirting with the process [of legalizing sports betting]. Georgia is of unique interest. Massachusetts is of unique interest. And those are three states that could critically really give entrepreneurs a chance in having a direct, open — truly open — competitive licensing regime.”
Because its business model is new to the United States, Sporttrade will likely expand to new markets slowly. So, small groups of bettors will gain access to Sporttrade at a time. Traditional sportsbooks will also have a competitor that can absorb banned sharp bettors. So, Sporttrade and traditional sportsbooks will share a complicated relationship.
Bettors will benefit from that complex relationship, though. Avid bettors will have a new way to bet on sports. Sharp bettors will have a legal sports betting platform that won’t boot them. Finally, day traders and speculators will have a new platform to use their trading skills on. (Although, yield-skimming will likely appeal to few bettors.)
Sporttrade will change the market dynamics of some of the United State’s most important sports betting markets. It will be a brand to watch as it begins its soft launches in 2022.