Sporttrade wants to bring an entirely different form of sports betting to Colorado. It’s called exchange wagering, whereby bettors set their own odds which must be matched by another bettor.
Currently, only New Jersey has a regulated platform for exchange wagering. No state has created specific rules governing exchange wagering.
The Colorado Limited Gaming Control Commission considered the proposal from Sporttrade recently. The body voted 3-1 to take no action at this time. Board members conceivably want to learn more about exchange wagering to figure out how it would affect sports betting in Colorado.
What exactly is exchange wagering?
The sports betting market in Colorado remains robust, especially Colorado online sports betting. That state boasts the most online sportsbooks with 26 of them.
Exchange wagering is a unique form of sports betting that takes out the oddsmakers. Instead of betting on previously set odds and playing against a sportsbook like with typical sports betting, exchange wagering allows bettors to instead wager directly against other bettors.
A bettor sets the odds himself (or herself) then waits for another bettor to agree to those odds and bet against the initial bet.
The simplest way to imagine exchange wagering is as a stock market for sports betting. Once a wager is matched between two bettors, other bettors can buy shares of that wager. It’s essentially buying stock in the wager itself, Brett Buckingham, an agent with the Colorado Department of Revenue, told The Denver Post.
“The exchange itself, which we are still going to consider as an internet sports betting operator, really is kind of a clearinghouse for it. They’re like the NASDAQ for it.”
Exchange wagering is not designed to replace sports betting. Instead, it’s another way to bet on sports.
Alex Kane, chief executive officer of Sporttrade, told the Post it simply allows players to find the best odds quickly.
“Exchanges allow customers to enter their own odds, which informs the odds other players see. On an exchange, anyone can partake in helping set the pricing.”
Sporttrade would take a small commission on wagers
The Colorado Limited Gaming Control Commission has been discussing rules to regulate exchange wagering. There is no blueprint to follow, much like when Colorado created a market for recreational marijuana sales.
Sporttrade’s exchange wagering platform would be considered another sports betting operator and would apply for licensing the same way. They would have a mobile app similar to most sportsbook mobile apps already legalized and regulated in Colorado.
The only difference would be the platform in question would act as a facilitator to connect bettors to one another to wager against one another. It’s like providing a dance floor to square-dancing couples.
Sporttrade’s revenue would come from a commission of 2 to 2.5% on every wager matched and completed. Wagers would be revoked if a match is not found.
Commission wants to proceed carefully on exchange wagering
The reason for a vote of no action by the gaming commission was probably to give the board more time to see how the system would fit in Colorado. With only New Jersey currently allowing exchange wagering, it’s uncharted territory for the commission, Commissioner Justin Davis told the Greeley Tribune.
“There aren’t any rules in place in the nation, or probably the world yet, so we need to proceed carefully. I know the division has done a lot of research to make that happen. But we’ve had a lot of issues raised. I think it’s important to proceed carefully.”
It is quite possible exchange wagering makes its way to Colorado in the near future. Before it does, regulators are going to take their time to make sure it works well in a sports betting system that has been working very well in Colorado.
