Exchange-themed sports betting start-up Novig looks set to go live in the US for the first time after receiving a licence to operate in Colorado.
The company confirmed it was in receipt of an Internet Sports Betting Operator licence from the Colorado Division of Gaming and now expects to launch its product in November.
The Colorado launch will mark Novig’s US sports betting debut. It will be facilitated by a market-access partnership with Full House Resorts and its Bronco Billy’s Casino venue.
Novig is pitched as a sports betting exchange model that gives bettors the power to set their own odds or take the best price on the market.
However, users will not be able to set their own prices on the platform as peer-to-peer exchange betting is not regulated in Colorado.
The Colorado Limited Gaming Commission (CLGC) considered regulating exchange betting in the summer, but the proposal was paused due to concerns over taxation.
Novig said it will look to offer a commission-free, high-frequency sports betting exchange as and when exchange wagering is approved by state regulators.
At launch, Novig will initially offer NFL, NBA, MLB, NCAAF, and NCAAB markets before expanding to other sports next year, while customers will be able to place bets on Moneyline, Point Spread, and Game Totals, both pre-game and in-game.
Novig – which counts Sporttrade and Prophet as competitors in the exchange start-up space – is backed financially by investors including Y Combinator, Joe Montana and Lux Capital.
A seed funding round concluded in August as the company raised $6.4m from a consortium of high-profile tech investors.
“We’re thrilled to kick off our journey in the vibrant sports betting landscape of Colorado, and we’d like to thank the Division of Gaming for their help throughout the process,” said Novig CEO and co-founder Jacob Fortinsky.
“We’re committed to building an unparalleled, community-led betting experience, and we look forward to becoming the go-to destination for sports fanatics and sharp bettors alike.”
US sports betting exchange start-up Novig has concluded a seed funding round, raising a total of $6.4m from a consortium of high-profile tech investors.
This milestone comes just before Novig’s anticipated launch in Colorado in October.
The funding initiative was spearheaded by Lux Capital, a New York-based venture capital firm.
Notably, the funding pool attracted participation from around 30 investors, including computer scientist Paul Graham, investor and Hall of Fame NFL quarterback Joe Montana, and Dropbox co-founder Arash Ferdowsi.
The list also includes prominent VC fund Y Combinator, Soma Capital, Innospark Ventures, Rebel Fund, Bayhouse Capital, Archon Capital, Palm Drive Capital, TRAC, True Culture Fund, CapitalX, and numerous others.
Novig is a peer-to-peer exchange that offers users the ability to place bets directly against their friends or the market, distinguishing itself from traditional set-ups where bets are placed against the house.
Rather than charging retail users, Novig generates revenue from three main sources: institutional traders, data monetisation and internal market making.
Novig CEO Jacob Fortinsky (pictured left) and CTO Kelechi Ukah, are recent Harvard graduates with previous experience at Jane Street and Bank of America, as well as in machine learning and politics.
“We’re honoured to have the support of so many of the world’s leading tech investors, who believe in our mission to democratise sports betting for good,” Fortinsky stated.
“Our vision is clear: to reshape the sports betting landscape that has long favoured exploitation over innovation, and to usher in an era of integrity, transparency and empowerment.
“Together, we’re rewriting the rules and putting the power back in the hands of bettors,” he added.
He added that each year $300bn is wagered on sports in the US. “All of which is bet against retail sportsbooks, which have egregious 7-10% margins, discriminatory and inefficient practices, and a stale betting experience. No matter how good of a sports bettor you are, the house always wins,” he said.
In preparation of its launch, Novig conducted a beta test involving 200 users who engaged in a two-week pre-launch trading tournament.
This effort resulted in 15,500 orders across 1,290 markets.
Novig’s platform offers instantaneous confirmation of live bets, and the firm claims that its matching engine is 100 times faster than those employed by industry frontrunners.
“We’ve been overwhelmed by the positive reception of our product from Novig’s first users and are excited to bring our product to regulated markets beginning this fall in Colorado,” said Fortinsky.
Last year, Novig secured a spot in the accelerator portfolio of Silicon Valley’s Y Combinator.
The accelerator invests $500,000 per company biannually in multiple start-ups.
The start-ups then relocate to Silicon Valley for a three-month period, during which mentors collaborate closely with each enterprise to refine their processes and enhance their investor pitches.
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.