- Sporttrade, a Philadelphia-based startup, is racing to build the Robinhood of sports betting.
- Its app, which lets users to trade sports bets like they would stocks, launches in New Jersey Thursday.
- The company is targeting an audience of day-trader types and experienced sports bettors.
Sporttrade, a Philadelphia-based startup, is racing to build the Robinhood of sports betting.
On Thursday, its new app that allows users to trade sports bets like they would stocks goes live in New Jersey.
The startup, which has raised $36 million from investors including Nasdaq and Jump Capital, is at the forefront of a new breed of sports-betting exchanges and platforms that are designed to appeal to day traders and other financially minded bettors.
Sporttrade, which Insider trialed in its beta version this week, looks more like a trading app than a sportsbook.
Instead of odds, spreads, and moneylines, Sporttrade speaks in “markets” and “contracts.” Users trade on the probability of an outcome — like the Los Angeles Chargers defeating the Kansas City Chiefs on Thursday — and that probability is a price. So, the cost of a “contract” on a Chargers win is around $26.50 ahead of kickoff, suggesting 27% likelihood that’ll actually happen and a potential profit of around $72, including Sporttrade’s 2% commission.
Unlike most sportsbooks, Sporttrade also lets users sell their positions, transacting in either contracts or dollar amounts. For instance, that price for a Chargers win could spike during the game if the team takes a surprise early lead, giving users a chance to cash out before the game ends or buy more of their position.
There’s still a learning curve for new gamblers, but Sporttrade’s look and lingo is meant to align more with the way traders buy and sell stocks, futures, and the like.
How Sporttrade is targeting day traders
The app is going after potential high-volume bettors who may never have bet on sports before, or who may be frustrated by time delays and other restrictions on in-play betting on traditional sportsbooks.
CEO and cofounder Alex Kane, speaking to Insider on Wednesday en route from a Nasdaq market-surveillance regional summit in Chicago, described some of the event’s attendees as Sporttrade’s ideal customers. They’re like the people who work at Nasdaq (which is an investor in Sporttrade and supplies the tech it uses to monitor trades on the platform), the New York Stock Exchange, or the Intercontinental Exchange, which have seen their industries transformed by apps like Robinhood.
“That is our customer that does not currently bet on sports and would be hyper high volume customers on day one,” Kane said, “because they totally understand the business … they’ve seen this all happen in their industry in the last 25 years.”
It’s targeting a niche, but possibly a very valuable one that might bet in higher volumes. Sporttrade, which soft launched last Thursday with friends and family, found in its first few days that the average user was trading more than one contract on average, and staying logged in for 30 minutes or more at a time. The app had more than 80 trades during Monday night’s Broncos-Seahawks game, Kane said.
“Not only are we kind of proving that we can do this, the customers are actually engaging and adopting this sort of experience, and that’s magical for us,” Kane said.
Sporttrade isn’t the only startup circling this space. In Europe, betting exchanges like Betfair have long existed alongside traditional sportsbooks. In the US, there are now various peer-to-peer exchanges from BettorEdge to Prophet that let users bet against each other instead of playing against the house. And exchange startups like STX are vying to go after a more investing-focused audience.
One of the biggest differences between Sporttrade and its peer-to-peer rivals like Prophet is that Sporttrade is working with institutional market markers, like stock exchanges do. That means it won’t have to rely on having another bettor on the app to take the other end of a wager.
“Liquidity is absolutely crucial to the success of any marketplace,” Kane said, adding that that it was “monumental” task to build a platform that mirrored the infrastructure of real capital markets.
How Sporttrade plans to compete with DraftKings and FanDuel
Sporttrade is going not only after new gamblers, but experienced ones who are looking for better ways to wager. That means competing head-on with market leaders like DraftKings and FanDuel for some of their highest-volume customers.
DraftKings and FanDuel are spending hundreds of millions a year on marketing and promotions, while companies like Caesars Entertainment have touted bonuses as high as $5,000 for new players when entering high-profile new markets including New York.
Sporttrade said it doesn’t plan to rely on promotions to sign up customers.
Instead, it’s leaning into influencer marketing. It’s lined up deals with sports and betting brands like Unabated and Pine Sports and finance creators like the Wall Street meme account Litquidity, which is also an investor in Sporttrade.
It also plans to win the sharps away from rivals like DraftKings and FanDuel by working with affiliates to get its prices on odds-comparison sites where experienced bettors turn to find the best price on a given bet.
It’s also hoping to build on that with word of mouth as people start to experience the app firsthand.
“Those are very tenable acquisition strategies,” Kane said. “They won’t bring us 50,000 customers, but that’s not what we’re going for in the first six months. We want to prove that customers like this, and that they’re engaging with our platform more than they’re engaging with the traditional sports-betting platforms.”