Sports betting startup Sporttrade is using Nasdaq’s technology to prevent insider trading as it prepares for its launch in the fourth quarter.
Sporttrade will use the technology to monitor bets made on its platform, tracking irregular activity that could possibly be nefarious — like insider trading or gambling addiction. The Nasdaq partnership doesn’t come as a surprise, considering former Nasdaq Stock Exchange President Tom Wittman joined the startup’s $36 million funding round in June.
Founded by Drexel University and Comcast LIFT Labs alumnus Alex Kane, Sporttrade is like a stock exchange for sports bets. Headquartered in Camden, the startup lets bettors buy “contracts'' of a particular outcome of a game and sell it to other bettors on the app if or when the odds change.
Sporttrade needed a way to surveil its sports betting and protect bettors from nefarious activity, Kane said. Nasdaq’s technology tracks all the bets and trades made, and it can let the startup identify and investigate problem behavior. In the future, Sporttrade will be able to identify those issues in near-real time using machine learning, artificial intelligence and geolocation, Kane said.
“Maybe someone is close to a trainer and knows that someone may not play, and maybe they come on to Sporttrade thinking they're gonna game the system,” Kane said. “Little do they know we have this entire technology infrastructure that's going to spot that over time.”
The Nasdaq partnership also lends some credibility and name recognition to Sporttrade, Kane said, and it connects the startup to veterans of the exchange-building world. Kane likened his startup to Nasdaq, as both are electronic exchanges where buyers and sellers can choose the price at which they trade.
“When we explain to Nasdaq how sports betting works currently, it brings them back 25 years to when they were able to disrupt the specialists from the New York Stock Exchange,” he said. “And that's what Sporttrade, in a lot of ways, is doing in our industry.”
The startup is now prepping to launch its app sometime in the fourth quarter. Kane declined to disclose the date the app will officially launch in New Jersey, citing the company’s work with regulators.
Sporttrade is continuing to work with regulators in other states but it faces the hurdle of getting exchange wagering legalized. The company has a market access partner in Colorado, where it looks to launch in 2022.
Kane isn’t only targeting states that have already legalized sports betting — he’s also seeking to get exchange wagering built into gambling laws in states that are considering legalizing sports betting. Sporttrade is lobbying legislators and stakeholders in gambling regulation, Kane said.
“We now have this incredible opportunity where we're able to pick our heads up out of the water,” he said. “We are now going to participate in the formation of these rules.”
