SportStack is the new exchange on the block and Gambling Insider caught up with CEO Nick Smith to talk about the product.
Can you give us an introduction into SportStack?
People who use Football Index understand at a very high level the concept of being able to buy and sell shares in players. I do get asked what’s the difference between Sportstack and Football Index because at that high level it does appear to be very similar. I wrote an article on the three main differences recently which has been taken very well by the Football Index community, because we are very different concepts.
I think both companies have obviously noticed there is a huge opportunity to finally enable people to express their opinions on player performance and make money from that. Traditional betting allows you to bet on pretty much everything except player performance. Fantasy sports in itself is its own kind of multi-billion dollar industry. But we don’t believe you should have to play a fantasy or free-money game to express your views on player performance, so that’s really where SportStack comes from.
How is it different from Football Index?
In terms of the differences, the first is the value of the players is based purely on on-pitch performance. We’re launching with matchday markets, which means you can buy and sell shares players right through the week and until the final whistle. Players will earn a payout of between 0p and 100p ($1.29) during a match. We’ve laid out a scoring table on how this is judged. There are about 15 attributes: goals, cards, etc. What the market’s doing is speculating on how much those players will earn and how much their shares will pay out at the final whistle.
Obviously, Football Index is a broader cocktail of things, with media and transfer speculation affecting price. They have their own risk management as well, whereas our market is a pure peer-to-peer marketplace, just like the stock market or Betfair. The value of players is purely on player performance; number two, this is a proper exchange – pure peer to peer.
The main feature the community is getting excited about is going short on players and being able to express an opinion on a player doing badly. Not in betting or fantasy can you ever express an opinion that a certain player actually won’t do well.
Do you think the ability to short players will appeal to everyone or perhaps narrow down the audience?
It’s one of those things where we understand the majority of users probably won’t engage on going short. If you look at Betfair’s data, it’s clear only 10% of the user base will ever lay a bet. Quite often, they’re the much larger users. We’ve been very conscious of the fact we want our product to have very wide mass market appeal. So, for a normal user, you wouldn’t even necessarily need to be aware you could go short on a player. But it’s just a feature for users who do want to engage with that. We want to replicate the growth story Betfair has had in the last few years. If you can’t go long and short, you will never get serious punters involved in that market.
How soon are you looking to branch out into other sports?
We obviously called it SportStack for a reason. The whole concept is scalable to cover any sport. All we need to do from a business side is create a scoring table for that sport. In terms of timings, it’ll be towards the end of next year we’ll look to move into other sports. From a tech perspective, there’s not much work to adopt a new sport and we’re going to let our users tell us what sport they want next.
From a business perspective, we’ve got our mind focused very much on what’s happening in the US. Fantasy sports is huge out there, the legality is moving in our favour and some of our investors are based on the East Coast, so we’ve got some good leads out there. We understand SportStack has huge potential for US fans.
On a personal note, was it purely passion for the product which drove you to leave Goldman Sachs and start SportStack?
It was definitely a big part of it; my Co-founder and I worked together and found it ironic we were essentially professional gamblers in suits betting on financial markets every day. We knew from the inside what we were doing was no different to what a lot of people do on sports. It’s purely perception, this archaic perception that financial markets are really sophisticated and sports are seedy and shouldn’t be respected in that way.
That’s absolutely not the case. It’s very much something that played on my mind for a few years: if you can speculate on virtual currencies and all these things now, why can’t you do the same on sports? When PASPA was overturned in the US, that was also a kind of sign from above that triggered us to take firm action and move quickly.
