Innovating sports betting with capital market surveillance technology

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Sporttrade and Nasdaq recently announced a new technology partnership, through which Sporttrade will leverage Nasdaq market surveillance technology. We caught up with Alex Kane, founder and CEO of Sporttrade, to learn more about the vision behind Sporttrade, how the company is leveraging technology from the capital markets and its plans for the future.

Can you start by telling us about Sporttrade, your vision and how the idea was born?

I was an undergraduate at Drexel University in Philadelphia, majoring in business law and finance when I first learned about options trading. Around the same time, in 2016, a friend introduced me to sports betting. I remember thinking I would like it because I was part of the golf team at the time and I was also interested in sports. However, sports betting was a new concept for me, and it struck me that the way sports betting is set up today can be a bit archaic. Sports betting doesn’t have to be that different from traditional capital markets. This was the impetus of Sporttrade, thinking that there must be an easier and more customer friendly way to approach sports betting. We wanted to leverage the ingenuity and innovation of capital markets to create an easy, accessible and dynamic customer experience for those interested in sports betting.

Sporttrade is an exchange where we list sports scores. Our platform matches buyers and sellers of contracts (sports betting) in the results we list. We combine them safely and transparently. It is a comprehensive centralized sports betting exchange that allows customers to negotiate on the probability of sports betting results. We use probability instead of US odds, where the price of a contract is equal to the probability. For example, let’s say you want to buy the Eagles which are trading at $ 45 to beat the Falcons, which means 45%. Place your trade and you can sell it during play in play, and you don’t have to wait until the end like you do with a traditional bookmaker.

Sporttrade was formed in 2018 as a way to discount unrealized profits from trading (just like trading stocks) on the likelihood of a sporting event occurring. There is certainly room to create value in this industry as it is ripe with downtime opportunities.

You recently announced a technology deal with Nasdaq, through which Nasdaq will provide surveillance technology to Sporttrade. How was this partnership with Nasdaq born and what does it entail?

Earlier this year, we announced a fundraising deal that Nasdaq Ventures was a part of. Just like many other exchanges around the world that use Nasdaq market surveillance technology, we need to know what’s going on at our location to provide a safe environment for our customers. We care about problem gambling and don’t want people to gamble irresponsibly on our platform. With this type of technology, we can use machine learning principles to identify trading activity in real time and share it with our regulators. In partnership with Nasdaq, we want to take the lead in elevating the industry with capital markets principles and putting the customer at the forefront. We can be at the forefront in terms of responsible gaming and in terms of identifying potential abusive trading behavior and sharing it with regulators. It was a no-brainer to collaborate with Nasdaq on this.

Why are 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 venue. So the industry hasn’t done a great job of building trust with the customer. It is absolutely critical that the client transacts securely, transparently and fairly on a central limit order book and that he can compete on an equal footing with market makers. It doesn’t exist in sports betting today.

I can’t wait to tell the world of Sporttrade. We are very disruptive to the classic way of thinking about sports betting or market surveillance. It is up to us to turn to regulators to demonstrate why this is better and safer for the customer. I look forward to the general feedback and see how capital markets can meet the world of sports betting and we are thrilled to bring these two worlds together.

How do you see the evolution of the sports betting industry in the near future?

Currently, there are around 20 states that have licensing regimes for sports betting, and around 35 states are projected to have mobile regulated sports betting in 2025. The big opportunity we see right now is in in-play betting, elsewhere. words, placing bets on outcomes after the game where the outcome you are betting on has already started. This is where the volume increase occurs. The barriers we see for the industry have to do with the quality of execution for retail participants. Currently, if you try to place a bet on a bookmaker, you are subject to an asymmetric speedbump and it can take several seconds for your bet to be settled. The future of the industry is looking to apply the principles and technology of capital markets to bring the quality of execution to in-play bets more in line with what we see in retail trading during times of volatility. We want to make the game smoother and frictionless.

What do you expect in 2021? What excites you about the future of this industry?

We are working with New Jersey regulators and plan to roll out our product in a phased roll-out capacity over the next few months. It is a mobile app, so customers will be able to use Sporttrade via the mobile app. As for what we expect in 2022, we want to launch in more states. We recently announced the acquisition of a company in Colorado and, in the coming months, we hope to have more exciting news on where Sporttrade will be launched beyond New Jersey and Colorado. We focus on getting the right customer experience, starting with simple features and letting the customer take us on the journey of what they want to see. Sports betting right now is very transactional. There are lessons to be learned from disruptive companies in capital markets on how to keep the customer more engaged and how to provide customers with more tools and data to make more in-depth decisions, such as showing their entire order book. We focus on creating more of a trading community and network effect, and try to look at what will allow the client to research and show them what their peers are doing. There are so many ways we can look at capital markets and take some of these principles and apply them to what we are doing.

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