Exclusive Interview: Smarkets CEO Jason Trost Talks US Sports Betting

The US sports betting industry is a little more crowded following the news of a partnership between sports betting operator Smarkets and casino developer Full House Resorts.

The multi-year deal gives Smarkets access to the Indiana and Colorado online sports betting markets (note: legal online sports betting in Colorado is contingent on a 2020 referendum.

BettingUSA was able to catch up with Smarkets founder and CEO Jason Trost to get his thoughts on Smarkets place in the US sports betting market.

Can Smarkets Be a Disruptive Force In the US?

Smarkets is best known as a betting exchange, but with the recent launch of its SBK sportsbook app and a funding round with Susquehanna Growth Equity Investment, it can now add the title traditional sportsbook to its resume, and that’s what it plans on debuting in Indiana.

According to Trost, Smarkets is looking to disrupt the US sports betting market in several ways, most notably its superior pricing and tech. But Trost also believes Smarkets has a different philosophy than its competitors.

“Pretty much all of our other competitors think of sports betting an an entertainment business. We think of sports trading as an asset class and are trying to build technology that treats it like that.

“We haven’t launched in the US, but I think the customer will like our product a lot more than the incumbents.”

A Sportsbook For Sports Betting Twitter?

The first thing Trost brought up was Smarkets superior pricing, and his belief that people are more price-sensitive than it might seem.

“For traditional wagers, the average hold in the Uk is like 8%, and in the US it’s like 6%. We’re trying to do a hold of 1%, so it’s not just a little better, it’s shockingly better. If our competitors are -110 and we’re -102 I think a lot of people are going to be interested in that.”

On parlays and other traditionally higher hold bets, Trost said the company is shooting for holds of 5% or lower. That number is once again well below the typical sportsbook’s hold percentage for these bets.

Smarkets accomplishes these low hold margins by using the pricing from its betting exchange and dropping it into its SBK Sportsbook app.

“Smarkets at its core is a betting exchange, but a new product we released three or four weeks ago is called SBK that takes all of the superior technology that we’ve built and put a traditional sportsbook interface on it, so it’s easy to use for an everyday bettor. It’s designed to be accessible for everyone.”  

Everything Is In-House

Another advantage Trost highlighted was technology and know-how.

“We do the whole stack from the risk-taking to the front-end, to the back-end, to bet management. We do everything. It’s very rare [in this business] because it’s very difficult.

“Companies like FanDuel and DraftKings don’t have betting legacies, and both are white labeling their betting software. They weren’t able to build it themselves, they had to use another company to provide it, and I don’t think they do risk management. They’re more marketing agencies than sportsbooks.

“I think we know betting better than they do.”

Another benefit of owning its own tech is nimbleness.

“The nice thing about owning our tech is that if Indiana wants a modification, we can make them faster than our competitors who are using third-party suppliers.

“That makes us a lot more nimble.

“For example, we ship a new version of our to the app store once, or even twice a week. If you look at our competitors, it’s once every two or three months. Our speed and development are just faster than everybody. If we don’t have a feature we can add it really fast. If we have a bug we can fix it really fast.

“And every time we ship a new version our tech and pricing is just getting better and better. I think our velocity will vastly outweigh the rest of the market.”

Having a native app also helps the Smarkets app avoid the Apple Store issues facing non-native, HTML5 apps.

Integrated Social Feeds

Don’t mistake Smarkets or its SBK app as a product designed exclusively for serious bettors. As Trost explained, it also has a social component.

“Beyond price and tech we have an Instagram-style social feed so people can share their bets, and leave comments and tips on the SBK social network. We’re experimenting with that right now, but we think sports bettors want to talk about their bets, you can see it on Twitter and other online forums. People like to talk about betting.”

Can a Betting Exchange Work In The US?

Smarkets’ foray into the US sports betting market will start with its recently unveiled SBK app, but as noted, the company is first and foremost a betting exchange – one of the most successful in the world.

Betting exchanges allow players to bet against one another rather than a bookie. Users can set or request their own lines and create their own bets.

As Smarkets explains it:

“The betting exchange simply provides the platform and pairs bettors against each other for bets to take place. The exchange takes a commission for this service – Smarkets charge an industry-low 2% commission on net market profit only.”

At present, no one is rushing to launch a US betting exchange. Like online poker, betting exchanges require liquidity, something the balkanized US market is currently lacking. Still, Trost is hoping that the US eventually becomes a feasible betting exchange market. That will require some significant changes

“It’s either going to require a repeal of the Wire Act or a liberal interpretation of the Wire Act,” Trost said. “One of those two things needs to happen before we can have a Pan-Americal betting exchange.”