Opportunity:
Currently we have NASDAQ for trading stocks, the Chicago Board for trading options and futures, BetEx will be the exchange for trading sports bets which is projected to have over $100 billion in handle in 2023. If you place a bet on sports, wouldn’t you want to have the option of selling it at market prices? BetEx is a fintech, a national stock market style exchange, for bettors to sell their bets as a derivative product under CFTC’s oversight. BetEx has received verbal green light from regulators for its product offering and is looking to file formal applications.
History:
In 2018 the Supreme Court ruled any state can offer sports betting, in 2022 over $60 billion was wagered on mobile phones in the United States, anticipated to exceed $100 billion in 2023. Currently 32 states have legalized mobile wagering with more states following suit.
Problem:
Sports-books are fragmented and have no interoperability. BetEx believes sports bets should not be restricted, they should be free trading and people should be able to sell their bets at any time on a national exchange and receive market prices for them.
Solution:
BetEx is a patented technology for placing bets at the state level and trading them on a national exchange similar to the options and futures contracts traded on the Chicago Board. BetEx is not a sports-book, it will not take wagers nor handle customer’s funds, it is a fintech that enables sports-books/casinos generate additional revenues and give bettors the option to sell their bets at market prices. Once BetEx receive its formal approval from CFTC and a couple of gaming states it will go live and will add other states to its network.
Product:
The BetEx App is similar to those used by broker-dealers such as ETrade, it will be hosted on the cloud for fast service, people can trade 24/7 which are instantaneously executed by a matching engine used in the securities industry. BetEx is not a sports-book, it is a fintech with SaaS model empowering sports-book operators to offer Exchange Tradeable Bets, a new and exciting type of bets.
Not a P2P Exchange
Most states do not allow peer-to-peer (P2P) wagering, moreover, the 1961 Wire Act is an obstacle for a P2P exchange to be offered in multiple states, thus it limits them to have enough liquidity and longevity to compete with casinos who have the lobbying power and lower customer acquisition costs. In P2P exchanges, sportsbooks act as facilitators, while in fixed odds betting, they act as the gate keepers taking bets on both sides of the event exerting some control. Operators will lose control if they only act as the facilitators, making it easier for fraudsters to launder money through the exchange or use it as a conduit to pay each other for an illegal act and disguise the payoff as a bet.
Patents and IP:
Business Model and Financial Projection:
Bettors pay 1% commission for placing bets and their subsequent trades and 0.25% for sports-books to sell their risks. BetEx projects to generate $450M in revenues and $300M in profits annually.
Team:
Founder has 25 years of experience in regulated gaming and sports wagering industry. The Company's executive team include high profile industry experts.
Investment Highlights:
$500K via a Simple Agreement for Future Equity (SAFE) with 25% discount to the next round of financing and a downside protection. The investment will be used to pay for legal fees to receive regulatory approvals for the exchange and to build the app for placing and trading bets. The founder personally has already paid for all the patents and IP costs and has received verbal green lights from regulators de-risking the investment the company is looking to raise.
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