Is Colorado close to getting a sports betting exchange?
On Tuesday, Novig announced it completed a seed funding round of $6.4 million for the “high-frequency, commission-free” exchange its planning to launch in the Centennial State in October.
The exchange is the brainchild of Jacob Fortinsky and Kelechi Ukah, who bill themselves as recent Harvard graduates who have worked in the financial sector and consider themselves sharp bettors with experience in machine learning and politics. They believe Colorado sportsbooks and wagering apps discriminate, offer a “stale betting experience,” and focus on creating “egregious 7-10% margins” that keep people from truly having a chance to win.
“Our vision is clear: to reshape the sports betting landscape that has long favored exploitation over innovation and to usher in an era of integrity, transparency, and empowerment,” said Fortinsky, Novig’s CEO, in a statement on the exchange’s site. “Together, we’re rewriting the rules and putting the power back in the hands of bettors.”
Fortinsky and Ukah, Novig’s CTO, said their product, unlike a traditional operator such as BetMGM Colorado, allows people to bet among friends or the market. Rather than charge a commission — or a vig, if you will — to individual traders, Novig plans to make money through fees to institutional traders, the ability to monetize data and its own internal market moving.
A recently concluded two-week beta test that featured 200 users led to 15,500 orders across nearly 1,300 markets, according to the company’s release.
Joe Montana Among Investors
Novig received investments from more than 30 individuals and firms. One of those investors is Hall of Fame quarterback Joe Montana.
“Novig is an absolute game changer,” Montana said in a statement. “The future of sports betting is here.”
Montana is not a stranger to the sports betting and gaming space. He also invested in a company called Balto Sports, a fantasy sports startup that had Nick Montana, Joe’s son, as one of the founders.
Balto, which was purchased by FuboTV in late 2020 as part of its now-abandoned sportsbook plans, also received funding from Y Combinator, which is also an investor in Novig.
No one from Balto is on the Novig team, Catherine Dougherty, the exchange’s director of growth marketing, told BetColorado.com.
Exchanges Can be Challenging in States
Novig won’t be the first exchange to market here in the U.S., although none so far operate in the Colorado sports betting space.
Sporttrade and Prophet Exchange operate in New Jersey, one of the country’s largest states for sports betting.
Colorado is a vibrant state for wagering. A study by USBettingReport.com found that the state’s per capita handle of $1,111 over a 12-month span was second only to New Jersey.
While exchanges are quite popular abroad, they’ve struggled to emerge in the post-PASPA U.S. landscape. That’s due to the Wire Act, the federal law that keeps information on sports wagers from crossing state lines.
That limitation could be a difficult challenge to overcome in Colorado, a state with an adult population of 4.6 million. New Jersey has about 7.3 million adults and can pull from several neighboring states with large populations, like Pennsylvania and New York.
Novig has market access in Colorado through a 10-year deal with Full House Resorts, which owns Bronco Billy’s Casino in Cripple Creek.
Dan Carr, the public information officer for the Colorado Department of Revenue, confirmed to BetColorado.com that Novig has applied for a license and the application is under review.