On September 15, Sporttrade launched its sports trading platform in New Jersey. It sells itself as a user-friendly stock exchange for sports, similar to what Robin Hood was for ordinary people interested in investing.
“The whole value of our business is trying to show that customers not only can do something that they can’t do on any platform besides Sporttrade but that they want to do.” Sporttrade CEO Alex Kane said.
On Sporttrade, bettors can buy and sell trades on sports wagers priced between one cent and $99. Winning bets are paid $100. Losing bets win nothing. However, Sporttrade sets itself apart with its focus on in-game markets. When a game starts, bettors can take advantage of each wager’s price movements. These trades can be especially volatile on teams poised to make dramatic and unexpected late-game comebacks.
“Someone did that [bought the Cardinals] at $2.50, but then sold it when it went down to two cents before it went back up,” Kane said. “So we didn’t have quite the success story there of someone riding it out to glory.”
Trading sports is a two-way street. It can result in forfeited wins or successful hedges. It also puts users in control of how long they want to hold onto their bets and how they want to manage their bets in-game.
Sporttrade Bonus and Pricing Structure
Sporttrade offers a unique approach to sports betting, and its reflected in its approach to bonuses and pricing. Currently, Sporttrade does not offer a welcome bonus. However, its pricing can be better than traditional sportsbooks.
Kane is cautious about welcome bonuses. While Sporttrade plans to offer welcome bonuses, they won’t be the extravagant $1,000 welcome bonuses offered by books like DraftKings and FanDuel.
“I think too many times, you see these huge deposit bonuses, and what you’ve gained in a lot of customers in great top-of-funnel and bottom funnel metrics, you’ve lost in completely blinding yourself to whether you have product-market fit,” Kane said.
Competitive Odds Over Welcome Bonuses
Sporttrade makes up for its lack of bonuses with pricing that can outdo traditional sportsbooks. For example, one Sporttrade user bought the Atlanta Falcons at 50 cents and sold them at $9.50 for a $9 per contract. That $9 profit is the equivalent of winning a bet with +1800 odds at a traditional sportsbook.
However, the Falcons lost on Sunday. At a traditional sportsbook, bettors would lose their bets. But at Sporttrade, users can take advantage of price movements from strong moments in the game that give Falcons traders hope. Those inflated hopes created inflated prices that make good sell prices before the game ends.
If the Falcons had won, that user would’ve won $100 for a contract he entered into for 50 cents — $99.50 in profit. That would have been the equivalent of winning a bet with 199/1 odds. Even competitive market-making books like Circa wouldn’t have offered odds approaching +20000 on a moneyline.
While Sporttrade’s pricing partly depends on users’ trading strategies and risk tolerances, it offers competitive odds in a saturated sports betting market.
How Sporttrade Works like a Stock Exchange
Sporttrade users can buy and sell their contracts on different wagers because of agreements Sporttrade has made with super users called market makers. Market makers are large groups that have agreed to buy trades on Sporttrade. Since there’s always someone buying contracts, bettors can always buy and sell the contracts they choose. (This is what high liquidity means.) Market makers play a critical role on financial exchanges, only with much higher stakes.
“If the market makers on NASDAQ pulled out [of the market] … 401k’s would collapse,” Kane said. “Now this isn’t as life or death for sports betting, but they [NASDAQ] know it’s [liquidity] critical for engagement.”
Over time, the hope is that Sporttrade’s user base will grow large enough that these market makers won’t be the ones allowing trades to happen. With enough users, there will always be someone to buy what someone else is selling. Trades will be able to happen in real time.
What’s Next for Sporttrade?
Behind the scenes, Sporttrade’s market makers are treating their purchases on Sporttrade as an investment. If Sporttrade becomes liquid without large market makers, then those market makers can use Sporttrade as another exchange to make money on. Large companies could trade hundreds of thousands of contracts simultaneously, making large profits at scale.
Sporttrade and its market makers share the long-term goal of a healthy and liquid sports betting exchange. New Jersey will be a telling test ground for the country’s first stock exchange for sports.