Q&A: BetDEX CEO on blockchain betting challenges and securing an Irish licence
iGN: You recently acquired your remote gambling licence in Ireland. Why did you choose to enter that market?
VS: Ireland is just one of many different jurisdictions that we eventually hope to operate in, so we’re looking at a number of other licences as well, which we’re planning to pursue over the next few months and years.
Ireland is a relatively small country in terms of population, but it’s home to one of the oldest betting markets globally, and the population there has been betting for a long time.
That means they run into a lot of the same issues which our platform tries to solve, so there’s less of an education process required for us to launch in a country like Ireland, compared to other countries where gambling doesn’t necessarily have as much of a history as it does over there.
iGN: Ireland is currently in the process of introducing a new regulatory regime for its gambling sector. How did that affect the licensing process?
VS: At present, licence applications are made with the Revenue Department of Ireland, so you have to fill out certain applications and then they carry out a background check on the directors and owners of the company, dig into the product that you’re offering and evaluate your business model. After you pass the due diligence phase, the licence is granted and there are fees to be paid.
The process took us around three to four months, from start to finish. And if/when the new gambling bill is signed into law, we would plan to apply for a license under that regime as well.
iGN: What unique challenges do you face when applying for licences for a blockchain-based betting exchange?
VS: A lot of the regulators that we speak to hear the word ‘blockchain’ and immediately react from a position of thinking “are these guys doing something shady?” Or, “is this illicit activity?”
So, there needs to be a process of educating the regulator and showing them how the blockchain is, I would argue, much safer and more transparent than traditional fiat rails.
It’s also important to show them the benefits that the blockchain can provide from a regulatory perspective in terms of AML and KYC. That is a challenge that needs to be overcome, but once you do overcome it, a lightbulb goes off in their head.
iGN: What are some of the regulatory benefits of operating on the blockchain?
VS: The transparency and traceability of the blockchain is really powerful and a strong tool for regulators. But it’s not necessarily one that they immediately think of when they hear the word “blockchain”.
Recently I have seen, especially internationally, regulators starting to become more comfortable with this, starting to really understand the technology and the benefits that it can offer them. But it is an education process, especially when we’re probably the first exchange to go about doing this. It does take time to walk people through that.
iGN: What are the benefits to customers of using blockchain?
VS: We chose to build on blockchain rails because of the benefits it can give to users, as it allows us to operate a product where we don’t have to limit winners, and we can offer a noncustodial platform with low fees.We’ve done a lot of research and we’ve been working in the industry for a while, and we always thought that would be a major selling point, but the proof is really in the pudding when a product goes live.
When people come and start wagering, you see whether they actually do resonate with those USPs or not. For me, almost to a tee, every single one of the customers that I’ve done interviews with, has fallen within that bucket.
iGN: What is the profile of your typical customer?
VS: I would say every customer that I’ve spoken to is a sports bettor first – they usually have some exposure to crypto, but aren’t necessarily ‘crypto enthusiasts’.
Almost all of them tell me that they found out about our platform because they’ve either been stake limited on other platforms, or been hit with too many premium charges because they’re ROI positive players, or in other cases they’ve ended up placing wagers on platforms where the platform has actually taken or lost their money – or it’s just disappeared.
So typically, our customer base is folks who I’d say are sports bettors first, and may have some exposure to crypto, but really find value in the differentiating factors that our product offers.
iGN: Where are your customers typically from?
VS: When we originally launched on our Isle of Man licence, from a jurisdictional perspective that allowed us to access about 40% of the world – largely jurisdictions in Asia and South America, plus parts of Europe and Africa.
So geographically, our customers are largely from international markets. Some of our biggest countries by volume are jurisdictions in Asia or South America. Our customers are really global, to be honest with you.
iGN: How has the product developed since launch?
VS: From a product perspective, we’ve been expanding quite a bit since we launched. When we initially launched in November, we only offered football markets on the World Cup, and we only had pre-match, match winner markets, so the only thing that you could bet on was for Team A or Team B to win, or for the match to end in a draw. Since then, we’ve expanded both the product inventory and the sports inventory.
On the sports side, we’ve added NBA, cricket, tennis, baseball, plus a few esports and MMA markets. And then from the product perspective, we’ve expanded in terms of the types of markets we offer – we’ve expanded into side markets for certain sports, so for example, on football, you can now bet on things like ‘both teams to score’ markets.
In addition, we’re continuing to expand those side markets for other sports, and we just recently launched in-play betting for cricket and tennis. We want to bring that to other sports over the remainder of the year as well.
iGN: How much further do you intend to develop the product, and will that require additional funding?
VS: If you ask me, we’re far from having a “complete” product, but I would say we’ve definitely made a lot of progress since the beginning of the year. I still think there’s a lot more that we can do, and I’d say we’re maybe 30-40% of the way to where I want to be in terms of product coverage. But, we started from a place which was maybe 5% of what I wanted when we launched, so we’ve made significant progress but still have a long way to go.
In terms of our funding, we raised $21m in a seed round in November 2021, and we still have a few years of runway left, so we’re not planning on raising any more capital in the short term. We want to be the world’s largest web3 sports betting exchange with high customer satisfaction, so right now the focus really is just on continuing to grow, developing the product and continuing to expand.
The product was built on open-source technology called The Monaco Protocol, so we only need a small team of around four engineers working on the tech. I do anticipate that we’ll probably raise additional capital in a few years’ time, but nothing in the short term.