|FIRST US SPORTS BETTING EXCHANGE NEARS REALITY AS SPORTTRADE SECURES NJ PARTNER|
POSTED ON AUGUST 25, 2020
Legal Sports Report
BY BRAD ALLEN
America’s first regulated sports betting exchange is one step closer to reality.
Sporttrade today announced a licensing partnership with Twin River Worldwide Holdings for the state of New Jersey.
The partnership will lead to the launch of Sporttrade’s sports betting exchange once Twin River completes its acquisition of Bally’s Atantic City.
Sporttrade did not specify a launch date but is expected to go live with its NJ sports betting product at some point in 2021.
The benefits of a betting exchange
According to Sporttrade CEO Alex Kane, the exchange product will bring all the benefits of financial markets to US sports betting.
That includes tighter margins and better prices, and the ability for sharp players to get big wagers down.
“We think we are building something revolutionary,” Kane told LSR.
“This is the first time people from the capital markets space have put time and effort into creating a sports betting product.”
Wire Act problems?
US customers have been calling for an exchange since PASPA was repealed in 2018. But the Wire Act means liquidity would have to be generated state by state.
FanDuel Group, whose parent company owns the Betfair Exchange, recently said exchange wagering was not a priority in the US because of those limitations.
When asked about that potential liquidity hurdle, Kane said Sporttrade would have a “robust market-maker program, where professional liquidity providers compete to offer the best price”.
He added: “We know liquidity is critical and we are fortunate to have people involved who were successful in capital markets and who know how to build an exchange from the ground up.”
Can a betting exchange succeed in the US?
Exchange betting in the rest of the world has never quite lived up to its potential. In the UK for example, betting exchanges generate around 7% of all online betting revenues.
That’s in part because exchange interfaces are more complex than a typical sportsbook. And like any peer-to-peer gambling ecosystem (poker, DFS) recreational customers are the lifeblood of the exchange ecosystem.
However, Kane argued that the US culture of stock trading and investing means there is an inherent understanding of how exchanges work.
Consider, Robinhood said in May it had 13 million accounts, up from 10 million at the end of 2019. Charles Schwab has nearly 13 million brokerage accounts while E-Trade is at 5.5 million.
That’s a lot of customers who understand the basic nuts and bolts of trading.
“The recent explosion in Robinhood and retail trading is just reaffirming what we thought to be true,” Kane said.
“The US customer is not like the global customer. The US sports bettor has an innate understanding of markets and trading. We think that’s going to lead to a lot more retail flow.”
Sporttrade will also present odds in percentages rather than decimals to appeal to retail customers.
Twin River has two more sports betting skins on its license. It is expected to use one itself, while Esports Entertainment has the other.