Sports Betting Exchange Company Sporttrade Ready to Make Some Noise in US Market

Sporttrade, a Philadelphia-based fintech, sports betting company has been looking to make waves in the US legal sports betting industry and on Tuesday took steps toward that goal with the announcement of $36 million in funding.

Sporttrade has been looking to carve a niche in the exploding US market through their platform that mimics the stock exchange wherein customers can buy and sell their interests in a sporting event after being matched up with other bettors that have interest on a similar event.

Interest in such a platform has been gaining steam lately and has officially caught the attention of such high-profile investors as Jump Capital, Impression Ventures, Hudson River Trading, Tower Research Ventures, Jim Murren, former CEO of MGM Resorts International and Tom Wittman, former CEO of the Nasdaq Stock Exchange. The announcement of the funding deal not only provides necessary clout for Sporttrade but also gives it some much-needed capitol for future expansion plans for the platform.

"Our mission is to elevate the sports betting industry by applying capital markets principles and technology and to place the customer at the forefront,'' said Alex Kane, Founder and CEO of Sporttrade. "Today marks a significant broadening of our coalition to achieve that mission"

What Makes Sporttrade Different

The best way to describe a betting exchange is to associate it closely with a stock exchange. They link bettors for various games and allow them to buy and sell positions on the games they are betting on. Bettors place wagers on odds that are similar to other platforms, but your bet is matched up with another trader that wishes to take the other side of the bet.

Betting exchanges offer largely the same betting opportunities as a bookmaker with couple of major differences. Betting exchanges don't actually offer up their own money in case of a bettor winning. In their case, there is no "house".

Customers are tasked with backing and laying bets against each other, not against the sportsbook’s oddsmakers as is traditionally done. A small commission is taken by the exchange on every bet instead of a book simply winning or losing on a wager.

The Cash Infusion

Like every company currently operating within the US legal sports betting scene, Sporttrade is looking to expand its unique way of doing business. Customer acquisition and expansion is at the root of the $36 million investment.

"We are thrilled to back Alex and his amazing team at Sporttrade. They have built a retail trading solution for betting, reflecting pricing based on win probabilities and allowing users to easily trade in and out of any position,” Yelena Shkolnik of Jump Capital said in the release. “To enable low-cost wagers, they've assembled a team from across capital markets and betting, locking in partnerships with institutional market-making partners to enable a powerful and liquid exchange. The U.S. bettor will finally have a transparent, open market of sports betting wagers to trade, and we couldn't be more excited to be a partner."

At present, Sporttrade has the unquestioned King of the US legal sports betting states, New Jersey in its sights for an impending launch. They currently have a multi-year deal with Twin River Worldwide Holdings, which is now Bally’s for market access into the Garden State market.

Right Time, Right Idea?

Alex Kane, CEO of Sporttrade has been getting a fair amount of attention from those involved in the legal sports betting scene. The exposure and the interest in the idea of the betting exchange is only building and has culminated with the latest investment by a few heavy hitters in the legal sports betting space.

David Frohardt-Lane, co-founder of Delavan Lake Investments commented that: "When we first met with Alex in 2019, he had a vision to transform the existing sports gambling model and leverage the benefits of stock market investing for the recreational sports trader. His drive to apply financial markets principles to benefit the customer was the primary reason we knew he was the right person to partner with in this revolutionary venture."

Possibility of Success

Betting exchanges have been operating in Europe for the better part of 20 years with varying success. US bettors have certainly heard of Betfair, Smarkets and possibly Matchbook which are all successful examples of this model working.

So, while there are potential headwinds from the traditional side of the sports betting industry in the US, Sporttrade is on track to make their debut in the American market, in New Jersey, sometime in the second half of 2021.

All eyes will be on not only Sporttrade but the New Jersey market to see just how the betting exchange is received in the biggest wagering jurisdiction in the country.

If all goes well, the $36 million investment may be just the tip of the iceberg for Sporttrade.