The Philadelphia-based sports betting exchange start-up Sporttrade has raised $36m in funding through a coalition of investors from both the financial and gaming industries.
Sporttrade is hoping to become the first regulated sports betting exchange to launch in the US gambling market.
Sporttrade raises $36m
According to the start-up’s announcement, a coalition of investors from the gambling and financial sectors have invested a combined $36m in the business.
Investors in the business include Jim Murren, former CEO of MGM Resorts International and Tom Wittman, former CEO of the Nasdaq Stock Exchange.
The lead investor Jump Capital, Impression Ventures, Hudson River Trading, and Tower Research Ventures make up the remaining investors.
Alex Kane, Founder, and CEO of Sporttrade said: “Our mission is to elevate the sports betting industry by applying capital markets principles and technology and to place the customer at the forefront. Today marks a significant broadening of our coalition to achieve that mission”
In the announcement, Sporttrade explained that the money raised will go towards customer acquisition, expansion in more states and “continued investment in a diverse, talented team.”
In August 2020, Sporttrade announced a partnership with Twin River Worldwide Holdings, now Bally’s Corporation, that would grant the exchange access into New Jersey. Under the agreement, Sporttrade will operate in the state under a licensing agreement with Bally’s Atlantic City.
Jump Capital partner, Yelena Shkolnik, added: “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.
“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 US 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.”
What is Sporttrade?
Founded in 2018, and based in Philadelphia, Pennsylvania, Sporttrade is a startup company hoping to launch the first US regulated sport betting exchange.
The company’s leadership includes a team of executives with sports betting and capital markets backgrounds and now has a team of over 50 staff.
According to the latest announcement, Sporttrade will be an open betting marketplace that will allow users to trade sporting events “the same way they trade stocks, with tighter spreads, more liquidity, and unique features.”
Sporttrade plans to launch an iOS mobile app later this year pending regulatory approval from the New Jersey Division of Gaming Enforcement.
Betting exchanges in the US
Betting exchanges are very different from typical sportsbooks as they combine trading and sports betting.
Currently, there are no betting exchanges in the US and it mainly comes down to liquidity the lack of it.
Under the Federal Wire Act of 1961, it is illegal to gamble across state lines and although the fall of the Professional and Amateur Sports Protection Act in 2018 paved the way for sports betting, the activity is restricted to individual states.
Therefore exchange operators would be restricted to running exchanges in individual states, and the challenge is that there would not be enough money in the pot to fund an exchange.
If an exchange operates in New Jersey, bettors in the state would only be able to bet against other people in New Jersey, not a sportsbook. This means that the pool of users and money involved would not be enough to sustain the operation.
However, Sporttrade hopes to be the first US sports betting exchange in US history, but it is not the only one.
The UK-based betting exchange Smarkets and Flutter Entertainment’s Betfair, the largest exchange in the world, are just some of the international firms hoping to launch their exchanges in the US.