Sports betting exchange Tradesports will return to the US market on 8 December, starting with a free-to-play beta launch before a planned real-money launch in 2020.
The operator – founded by former commodities trader Ron Bernstein – was first launched in 2003, initially based out of Ireland, but closed in 2008.
In April 2014, Tradesports relaunched as a fantasy exchange product, which was legal in the US under the Unlawful Internet Gambling Act of 2006. However, it closed again in November 2015.
On the relaunched exchange, players will be able to trade shares based on the likelihood of certain outcomes occurring.
The exchange’s return to the US market will come after an initial beta tournament, in which weekly contests are held where each participant in the tournament will start with a bankroll of $5,000 in virtual currency and the player with the most winnings at the end of the contest will receive a cash prize.
During the beta tournament, the market for an outcome that does occur will be settled at $100, and the market for an outcome that does not will be settled at $0.
This tournament will not be available in the state of Washington, due to laws governing social gaming.
After the beta tournament is completed, Tradesports intends to launch a real-money exchange in 2020. For the real-money exchange, pools will be separated by state because of issues related to the Wire Act.
A company spokesperson told iGB North America that they hoped to see new federal sports betting legislation that would allow for national exchange pools.
“Once we open Tradesports for real money trading, we won’t be able to pool liquidity between states,” the spokesperson said. “This will result in inefficient silos.
“We are in favor of federal regulations around sports betting even if a federal tax may be implemented. We believe a federal ‘overlay’ will further open up the market and increase volumes exponentially.
“States will likely gain additional revenue; as sports betting action continues to grow online and on mobile, current geo-tracking technology can ensure the appropriate collection of state taxes from each player in each state. Of course, we realize that federal oversight of sports betting will take time, but we believe it is a logical conclusion and will ultimately drive better value for players.”
Currently, the uptake of exchange betting in the United States has been low. However, the Tradesports spokesperson said it believed exchange betting would prove to be more sustainable than fixed-odds bookmaking in the long-run, owing to the fact that margins for the operator are guaranteed.
“There’s been a major land grab following the repeal of PASPA as sports betting operators stake out territory as quickly as possible,” the spokesperson said. “The easiest go-to-market strategy thus far has been to leverage traditional fixed-odds betting, which offers margins of up to 8%. That’s an attractive opportunity, but our approach is based on the belief that it won’t last in the long run.
“As the market becomes increasingly crowded, operators will need to lower their margins in order to compete. By contrast, Tradesports plans to offer lower margins (likely 3-4%) from the jump; this is possible because we’re a peer-to-peer exchange, so we don’t need to protect against a ‘bad beat.’”