Sporttrade has been attempting to bring exchange wagering to Colorado for two years. That effort has now paid off.
Colorado regulators awarded a sports betting license to Sporttrade on Aug. 24.
Shortly after, Sporttrade launched on Aug. 29. Colorado is the second state to allow exchange betting.
Colorado regulators took extra time to research exchange betting
Even so, Colorado sports betting continues to be profitable. In June, the state enjoyed a total gross gaming revenue of over $9.2 million, which led to just under half of a million dollars for taxes. Those figures could go up now that Sporttrade is up and running.
When Sporttrade first sought a license from the Colorado Limited Gaming Control Commission, there was hesitancy. In June, the commission voted 3-1 to take no action, undoubtingly to provide more time to research exchange wagering. Could it operate alongside traditional sportsbooks that set their own odds?
Commissioner Justin Davis told The Greely Tribune that caution was the only way to proceed. Even though Sporttrade was operating successfully in New Jersey, exchange wagering is uncharted territory in Colorado.
“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.”
How does exchange wagering differ from traditional sports betting?
Exchange wagering is sports betting without oddsmakers.
Instead of a sportsbook setting its own lines and odds for events, exchange wagering puts that power in the hands of bettors. Exchange wagering is more like a stock exchange. Bettors propose their own odds and lines. Other bettors agree to those odds, creating a head-to-head bet as opposed to playing against the house.
Once a wager is matched between two bettors, the bet is locked in. Then, others can buy shares of that wager.
Brett Buckingham, an agent with the Colorado Department of Revenue, told The Denver Post that exchange wagering mostly boils down to buying stock in a bet.
“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 meant to overtake sports betting. Instead, it is a new option for those who want to branch out and take control of their odds. Alex Kane, chief executive officer of Sporttrade, told the Post it 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.”
Exchange wagering and sports betting are connected like squares and rectangles. A rectangle is not a square, but a square is a type of rectangle. Exchange wagering is sports betting, but sports betting is not exactly the same as exchange wagering.
Will exchange apps thrive in the Mile High City?
Considering that there is so little data to pull from, projecting how well Sporttrade will do in Colorado is almost impossible. Right now, the only state that features Sporttrade’s exchange wagering is New Jersey, and it has not left much of a fingerprint since launching.
So far in New Jersey, Sporttrade is taking a while to get off the ground and bring in new players. In May, Sporttrade saw just $188,117 in revenue generated, which was the fourth lowest of the 12 licensed operators in the state.
Regardless, Sporttrade is excited to dive into the deep end of the pool to find out if it can swim, Kane said.
“Our team looks forward to expanding our presence across the US while continuing to refine our sports betting exchange to provide Sporttrade’s passionate user base with a secure, transparent and technologically advanced platform from which to wager.”