Sporttrade, a company poised to become the first sports betting exchange in the US, has announced it has raised $36 million in funding.
The Philadelphia-based fintech said in Tuesday’s release said the coalition of investors includes both the financial and gaming industry. They include lead investor Jump Capital, Impression Ventures, Tower Research Ventures, Hudson River Trading, Jim Murren, former CEO of MGM Resorts International, and Tom Wittman, who had worked as CEO of the Nasdaq Stock Exchange.
Additionally, Sporttrade issued convertible debt to Nasdaq Ventures with regard to the transaction. Funding will go to customer acquisition, expansion into more states, and continued investment in a diverse and talented team, the news release said.
Elevation of the Sports Betting Industry
Founder and CEO of Sporttrade Alex Kane said the company’s mission is to uplift the sports betting industry by applying capital markets principles and technology and to place the customer at the forefront.
The 27-year-old took to Twitter to share to mark a “significant broadening” of Sporttrade’s collation to achieve the mission.
Sporttrade’s iOS app is expected to launch in New Jersey during the second half of 2021, subject to regulatory approval.
The Only Sports Betting Exchange in the US?
Sporttrade plans to use the capital to bolster its position as the only sports betting exchange in the United States. The company’s sports betting enterprise is based on the principles of a stock market in which participants buy and sell their shares in an event with sellers and buyers being match by the operator.
However, Sporttrade’s “bets” are not banked by the sportsbook – which usually happens in traditional sports betting.
Jump Capital’s Partner Yelena Shkolnik said she’s excited to back Alex and the team at Sporttrade as they have built a retail trading solution for wagering, reflecting pricing based on win probabilities and allowing consumers to easily trade in and out of any position. “The US bettor will finally have a transparent open market of sports betting wagers to trade… “
A Revolutionary Approach
The news release further said the innovative approach will revolutionize US gaming by following the playbook of the nation’s capital markets and democratize the customer experience through a “secure and technologically advanced platform.”
Delavan Lake Investments also participated in the funding round. Its co-founder David Frohardt-Lane praised Alex, who “had the vision to transform the existing sports betting model and leverage the benefits of stock market investing for the recreational sports trader.”
Founded in 2018, Sportrade has gained a sudden boom in financing with the multi-million dollars being injected from a coalition of investors from the gaming as well as financial sectors.
But There Are Challenges…
According to the release, the company’s open betting marketplace enables the participants to trade sporting events the same way they trade stocks, with more liquidity, tighter spreads, and novel features like “always on’ in-playing trading, while allowing to trade in and out of bets at any time.
This type of trading would be new for the US, though it has been part of the betting landscape in other countries. Among other challenges, Sporttrade will have to bear the additional burden of educating US bettors about their concept, besides competing with the traditional mobile sportsbooks attracting more and more customers through aggressive promotional benefits.
As of now, Sporttrade is eying the New Jersey sports betting market. The company entered into a deal with Twin River Worldwide Holdings in August to enter the Garden State.