Sports Betting Marketplace Prophet Exchange Scores $10 Million in Latest Funding Round
Sports betting exchanges are fairly common in Europe but are only just beginning to gain traction in the United States.
Prophet Exchange — the first peer-to-peer legal sports betting exchange licensed in the United States — landed in its recent funding round. The latest investors for the New Jersey operator include Ninjabet, MIXI, and the Chicago Trading Company.
Prophet Exchange launched in the Garden State in August 2022, with New York Giants Victor Cruz placing the first bet. It notably handled over $1 million in peer-to-peer Super Bowl LVII bets.
With its latest round of funding, Prophet Exchange hopes to expand its offerings and its territory. Prophet currently offers money line, spread, and total markets for the NFL, NBA, NHL, MLB, and NCAA football and basketball. It plans to add soccer, tennis, golf, and UFX soon.
“Prophet’s current mission is to dominate the straight bet experience in the U.S. Best-in-the-market prices, creating offers with requested prices, unlimited action, and frictionless trading in and out of positions with lower capital requirements make up that experience,” said CEO and Co-Founder Dean Sisun.
A rather small U.S. industry
Sports betting exchanges are fairly common in Europe. For instance, the UK has roughly a half-dozen sports betting exchanges. However, they are only just beginning to find traction in the U.S.
New Jersey has two licensed two sports betting exchanges — Prophet Exchange and Sporttrade. So far, however, it is the only state to provide regulated sports betting exchanges.
Illinois also has a bill that would allow sports betting exchanges. The bill, introduced by Rep. Robert Rita in January, has failed to make much progress and got re-referred to the Rules Committee last month.
The liquidity hurdle
In general, fees are lower on exchanges. That’s primarily because the middleman is taking less of a cut. Unlike retail books and online sports betting sites, exchanges don’t have to protect themselves against losing money on a bet.
They have no skin in the outcome, and as a result, sometimes bettors can find more attractive lines on an exchange if they can find someone to take the other side. Until they grow in popularity, liquidity can be an issue for sports betting exchanges. In other words, it might be difficult to find a taker for bets on more exotic sports or bet types.
Since exchanges can only offer action in-state, smaller states — or states without a vibrant sports betting culture — may not offer enough liquidity to reasonably support an exchange.
