Sporttrade and Nasdaq recently announced a new technology partnership, whereby Sporttrade will leverage Nasdaq’s market surveillance technology. We caught up with Alex Kane, Founder and CEO of Sporttrade, to learn more about Sporttrade’s vision, how the company leverages capital markets technology, and its plans for the future.
Can you start by telling us about Sporttrade, your vision and how the idea came about?
I was a student at Drexel University in Philadelphia, majoring in business law and finance when I first discovered options trading. Around the same time, in 2016, a friend introduced me to sports betting. I remember thinking “I would like that” since I was on the golf team at the time and was interested in the sport as well. However, sports betting was a new concept to me, and it struck me that the way sports betting is implemented today can be a bit archaic. Sports betting doesn’t have to be that different from traditional capital markets. This was Sporttrade’s impetus, believing that there had to be a simpler and more user-friendly way of approaching sports betting. We wanted to harness the ingenuity and innovation of capital markets to create a simple, accessible and dynamic customer experience for those interested in sports betting.
Sporttrade is an exchange where we list sports results. Our platform connects buyers and sellers of contracts (sports betting) in the results we list. We match them securely and transparently. It is a centralized sports betting exchange that allows customers to trade on the probability of sports betting results. We use probability instead of US odds, where the price of a contract equals the probability. For example, let’s say you want to buy Eagles that are trading at $ 45 to beat the Falcons, which means 45%. You place your trade, and you can sell it during in-game play, and you don’t have to wait until it ends like you have to with a traditional sports book.
Sporttrade was established in 2018 with the aim of discounting unrealized profits from trading (just like stock trading) on the likelihood of a sporting event occurring. There is certainly room to create value in this industry as it is full of opportunities for disruption.
You recently announced a technology deal with Nasdaq, whereby Nasdaq will provide surveillance technology to Sporttrade. How did this partnership with the Nasdaq come about and what does it consist of?
Earlier this year, we announced a fundraising deal in which Nasdaq Ventures was a part. Just like many other exchanges around the world that use Nasdaq market surveillance technology, we need to know what is going on at our site in order to provide a safe environment for our customers. We care about problem gambling and we don’t want people to gamble irresponsibly on our platform. With this kind of technology, we can use the principles of machine learning to identify real-time trading activity and share it with our regulators. By partnering with Nasdaq, we want to take the lead in uplifting the industry with capital markets principles and putting the customer first. We can get a head start in terms of responsible gaming and in terms of identifying potential abusive business behavior and sharing it with regulators. It was obvious to partner with the Nasdaq on this one.
Why is market integrity and surveillance technology so important in sports betting?
It all comes down to our mission to put our customers first. We are all retail traders here at Sporttrade, and some of us are sports bettors as well. The framework of what we want to create, which serves as the foundation, is for the customer to feel that they are transacting securely and transparently on our platform. On many current sports betting sites, the market may close or your order may be rejected by the site. So the industry has not done a great job of building trust with the customer. It is absolutely essential that the client trades securely, transparently and fairly on a central limited order book and that he can compete with market makers on an equal footing. This does not exist in sports betting today.
I can’t wait to tell the world about Sporttrade. We are very upsetting about the classic way of thinking about sports betting or market surveillance. It is up to us to go to the regulators to show why it is better and safer for the customer. I look forward to the general comments and to seeing how the capital markets can meet the world of sports betting, and we are delighted to bring these two worlds together.
How do you see the sports betting industry evolving in the near future?
Currently, there are around 20 states that have licensing regimes for sports betting, and around 35 states are expected to have mobile-regulated sports betting in 2025. The big opportunity we see right now is in in-play betting, in other words, placing bets on the outcome after the part on which the outcome you are betting on has already started. This is where the increase in volume occurs. The barriers that we see for the industry have to do with the quality of workmanship for the retail participants. Currently, if you try to place a bet on a bookmaker, you are subject to an asymmetric slowdown and it may take several seconds for your bet to be successful. The Future of the Industry tries to apply the principles and technology of capital markets to bring execution quality to live betting more in line with what we see in retail in times of volatility. We want to make the game smoother and frictionless.
What are you looking forward to in 2021? What excites you about the future of this industry?
We are working with regulators in New Jersey and plan to roll out our product in a phased launch capacity over the next few months. This is a mobile app, so customers will be able to use Sporttrade through the mobile app. As for what we’re looking forward to in 2022, we want to launch into more states. We recently announced the acquisition of a business in Colorado, and in the coming months we will hopefully have more exciting news on the launch of Sporttrade beyond New Jersey and Colorado. We focus on the right customer experience, starting with the simple features and letting the customer take us on the journey of what they want to see. Sports betting is currently very transactional. There are lessons to be learned from disruptive companies in the capital markets on how to keep the customer more engaged and give customers more tools and data to make smarter decisions, like showing the full order book. . We’re focused on creating a community and network effect of commerce, and we’re trying to see what will allow the customer to research and allow them to see what their peers are doing. There are so many ways to look at financial markets, take some of these principles and apply them to what we do.