Betting exchange operator Smarkets made approximately 20 redundancies in November last year amid ongoing financial struggles.
The company – which also operates the SBK sportsbook brand – cut around one sixth of its workforce in a bid to drastically reduce costs.
US sports betting exchange start-up Novig has secured a place in the accelerator portfolio of Silicon Valley’s Y Combinator, a fund that gave rise to the likes of Airbnb, Stripe, Dropbox and Coinbase.
Novig is in the process of building a commission-free, high-frequency sports betting exchange that allows users to wager directly against friends or the market, rather than against the house – hence the name Novig. In the US, vig, or vigorish, is the amount charged by the sportsbook for taking a bet.
The peer-to-peer platform aims to launch in 2023. The backing of Y Combinator marks a significant milestone in the company’s ambition to disrupt the US sports betting industry, the company said in a statement.
Betting exchanges traditionally have low overheads because they don’t need expansive trading departments. They charge a small commission on each bet, which is usually less than the 5-10% charged by traditional sportsbooks.
Flutter Entertainment-owned Betfair is the European market leader of exchange betting, while US-focused start-ups like Prophet and Sporttrade are hoping to launch exchange betting products in New Jersey this year.
Cultivating enough liquidity is the central operational issue of any betting exchange. This is particularly true in the US, where bettors can only match or lay other bettors within the same state lines due to the state-by-state regulatory model.
Novig CEO Jacob Fortinsky: “Our platform will revolutionise the sports betting industry and experience as we know it, and it is great to have YC’s support in realising that vision.”
Y Combinator is a start-up fund based in California. Twice a year, they invest $500,000 per company in a number of start-ups.
The start-ups then move to Silicon Valley for three months, where mentors work closely with each company to improve processes and refine their pitch to investors.
Each programme culminates in Demo Day, when the start-ups present their companies to a carefully selected audience of investors. Since 2005, Y Combinator has invested in more than 3,000 companies, that are now worth over $400bn combined.
Novig was co-founded by CEO Jacob Fortinsky and CTO Kelechi Ukah (pictured). The duo are recent Harvard University graduates who are experienced in quantitative trading, financial technology, and sports betting markets.
Commenting on the Y Combinator investment, Fortinsky said: “We’re thrilled to be joining this incredible community of founders, and we’d particularly like to thank our group partners Dalton Caldwell, Diana Hu, Nicolas Dessaigne, and Richard Aberman.
“Our platform will revolutionise the sports betting industry and experience as we know it, and it’s great to have YC’s support in realising that vision,” he added.
Investor interest in the rapidly evolving US sports betting market remains high, particularly among niche start-ups that claim to solve a pain point.
Even though the public markets are struggling significantly, US sports betting start-ups are still able to attract investment from venture capitalists and seed funds.
Earlier this month, fan engagement business Tally Technology closed an oversubscribed $4m Series Seed funding round led by Acies Investments.