When the Professional and Amateur Sports Protection Act of 1992 (PASPA) was repealed in 2018, it was hailed as the beginning of an enormous new market, with billions of dollars in wagering volume up for grabs. It also signaled exciting new entertainment options for consumers, a surge in the value of leagues’ live games and an opportunity for media to offer entirely new types of sports coverage.

International books and startups converged on the market, convinced the U.S. would eventually reach betting penetration rates seen in a mature market like the United Kingdom, but with 10 times the potential players. But there was one differentiating factor –the U.S. sports bettor has a unique and differentiated profile compared to bettors in other countries.

We spent a lot of time talking to potential bettors, and on the surface, U.S. sports fans appear more eager for an array of betting products compared to international audiences, given U.S. sports analysts heightened focus on statistical analysis and metrics. Despite not growing up with a culture of betting, U.S. consumers have been conditioned by daily and season-long fantasy leagues to put their analysis and beliefs to work in wagers. U.S. sports fans also watch a wider variety of events, while UK counterparts tend to focus primarily on soccer, thus creating longer betting seasons and more value per bettor in the U.S.

However, it would be hasty or naïve to suggest the only thing holding back an American sports fan from making a bet is the lack of a legal book. Most U.S. sports fans do not grow up thinking about lines and odds; a typical book interface is daunting to all but the ~14M or so who have been betting on books abroad. On a more holistic level, currently 60 million season-long fantasy players are comfortable putting capital at risk, but they feel materially different betting among friends in a fantasy league, versus betting against a professional book.

There is another material distinction – the way Americans interact with financial markets. Americans are more heavily invested in financial markets, than the average citizen in other countries: 55% of Americans[1] own shares in public companies listed on the stock market, versus 38% of individuals in the UK[2]. And recently, commission free trading and fractional investing began to lower the barriers to entry. Meanwhile, apps like Robinhood and M1 (a Jump Capital portfolio company) dramatically accelerated and widened this already prominent interest in financial markets. The rise of investing among Gen Z’s and an emerging enthusiasm to discuss trades in social forums seem to encourage a different risk / reward calculus and accelerate a passion for active vs. passive investing; the graph below[3] does a nice job highlighting how distinct the U.S. appetite is compared to more than a dozen other countries.

This growing appetite for a mix of risk and entertainment need not be contained to stocks, options, or crypto. It logically extends into an enthusiasm to place a wager on the Los Angeles Lakers. But importantly, these apps and experiences have preconditioned the younger generation to expect low-cost trades, market transparency, and clear UX.

So, imagine how jarring it must be for those expecting fair prices and transparent financial trading markets, to go from free trading, to placing a bet in a book with an 8-10% commission! What is more, bet more frequently and you’ll see your activity capped at subjective levels from book to book, if you aren’t thrown out altogether – your success in penalized and will not be tolerated by most books. If so many Americans have clearly benefited from the revolution in pricing and transparency, why would they continue to allow sports books to charge exorbitant rates with opaque, one-sided rules?

Which is why we are thrilled to back Alex and his amazing team at Sporttrade. They built a retail trading solution for betting that reflects pricing based on win probabilities and allows users to easily trade in or out of any position. To enable low-cost wagers, they have assembled a team from across the capital markets and betting industries, locking in partnerships with institutional market-making partners to enable a powerful and liquid exchange. The U.S. bettor will finally have a transparent, open market of sports betting wagers to trade, and we believe the U.S. sports betting market is ready for a new model that better suits the American bettor.

[1] Ang, Carmen. “Two Decades of Stock Ownership in America.” Forbes, 4/6/2021

[2] Mavadiya, Madhvi. “UK vs. US: The Appetite for Investment.” 3/20/2019

[3] Acharya, Anish and Hafemeister, Matthieu. “Buy and Hold No More: The Resurgence of Active Trading.” A16z.com, 3/29/2021