While many sportsbooks have entered the Colorado market, only one has come from overseas so far. Smarkets runs a successful betting exchange in the United Kingdom. However, Smarkets’ new sportsbook made its American debut in Colorado, and its next stop is Indiana. We reached out to Pascal Lemesre, Smarkets’ PR Manager, to discuss the Colorado launch and what Colorado can expect from this young company.
How Smarkets’ Sportsbook Sets Its Odds
Smarkets has two products. One is the betting exchange that Colorado bettors will not have access to. The other is SBK, the sportsbook that launched in Colorado in early June. SBK is what Colorado bettors now have access to.
“SBK is powered by the exchange,” said Lemesre in an interview with Colorado Sharp. Bettors overseas with access to the betting exchange trade odds with each other. Since the odds are set by the bettors, the odds tend to be more competitive at SBK than traditional sportsbooks. Bettors can see the difference between SBK and the other Colorado sportsbooks in this La Liga matchup:
|Osasuna||Atletico de Madrid||Draw|
|Sky Ute Sportsbook||+400||-120||+230|
However, SBK does have a potential weakness that its competitors could exploit. “We don’t rely on things like boosts, bonuses, that kind of thing,” says Lemesre. “So sometimes a competitor will be better priced than us on, say, one or two selections on a horse race.” For bettors, that means that if one line has an odds boost at a few sportsbooks, then it’s worth comparing the boosts against SBK’s odds. But on the rest of the lines, SBK is a must-use sportsbook for bettors comparing odds.
SBK dominates the odds across the board because its bettors on the betting exchange creates the odds. That means no one is adding a house advantage. So how does Smarkets make money? “Obviously when you’re using the exchange over here [in the U.K.], we have a standard commission rate which is 2% on profits only,” Lemesre says. “But with SBK, there’s no commission. So, if you’re just an SBK user, you’re getting those odds. You’re not paying commission.”
Why Did SBK Come To Colorado First?
It’s one thing to come to the United States, but picking Colorado first seems like a strong vote of confidence in the state’s regulatory environment. After securing a partnership with Full House Resorts in September 2019, Smarkets was ready to bring a product to the states. However, Indiana was originally the favored state. “We didn’t expect Colorado to be the first one when we first signed the deal last year,” says Lemesre “But that’s the way it’s panned out, and I think Colorado is definitely one of the friendliest states for operators to go live in.”
Since sports betting legalization occurs state by state, each state has its own regulations. Some states, like Michigan, don’t have online sports betting. Others, like Nevada, don’t allow remote account registration. Colorado doesn’t make bettors–or operators–jump through crazy hoops. Outside of the paperwork, background checks, and fees, opening and running a sportsbook in Colorado is straightforward.
However, Indiana bettors still have hope. “We’re still open to go live in Indiana in the near future,” Lemesre assured me. The Hoosier State may get SBK access yet.
Why Hasn’t The Smarkets Betting Exchange Come To Colorado?
Colorado seems to have lived up to the hype and welcomed SBK with open arms. But why can’t Coloradans get access to Smarkets’ core product yet? “We would love to introduce the exchange to the states in time,” says Lemesre. “But basically, the Wire Act really prohibits us bringing the exchange to the states any time soon.”
The Federal Wire Act of 1961 prohibits wagers from crossing state lines. That means bets must be made and settled only within a state where sending and receiving wagers is legal. It’s why every sportsbook makes such a big deal about determining its bettors’ locations.
It’s also why Smarkets can’t bring its exchange to the United States–at least, not profitably. The Smarkets betting exchange financially depends on being able to have wagers cross international lines. “You have to have a pool of liquidity just in Colorado,” Lemesre says. That means the cash reserves required of all Colorado sportsbooks must come from Colorado alone. It cannot come from Smarkets’ current pool of money among its current countries of operation. “All of those countries pool together to build the liquidity and the volume on the platform. So we’re not being able to utilize that in the states because of the Wire Act,” Lemesresays.
However, he remains optimistic that federal law could become friendlier to the exchange model one day. “It feels like the legislation will have to catch up to modern times sooner rather than later,” Lemesre says. His optimism could be justified. PASPA was overturned in 2018, which allowed sports betting to be legalized state by state. If sports betting becomes mainstream in the United States, federal law could catch up one day.
But in the meantime, Coloradans will have to be content with the Smarkets sportsbook.
How Has The Colorado Launch Gone?
SBK launched in the United States in the middle of a pandemic when the sports selection was limited. “Obviously now’s not the best time to launch a sportsbook because there’s no sports,” Lemesre says.
Instead, SBK began with a soft launch, becoming the second of three Colorado sportsbooks to use this strategy. (BetMonarch and Sky Ute Sportsbook are the other two.) Lemesre seems optimistic about how the soft launch has gone, too. “It’s definitely baby steps to start with,” he says. “So, we’re just looking to get a small group of users on board who want to give the app a go. See what it’s like.” After signing up, new users receive emails asking for open-ended feedback for the Smarkets CEO. (I know because I signed up early and got one.)
This early feedback is key to Smarkets’ competitive strategy. “One of the things we can do as quite a small startup is be more agile than some of the bigger players. We can tweak things based on customer feedback easier, and that’s the kind of approach we’re taking in these early stages,” Lemesre says.
Smarkets may seem like a large company–its exchange has processed over $15 billion in bets–but its competitors are far larger. “You see the mega-mergers like Flutter merging with the Starts Group,” Lemesre says. “That is crazy the amount of brands under that umbrella now. And then you’ve got GVC as well.” The giant sports betting companies consolidating under one roof creates formidable competition. However, Smarkets’ has enough faith in its adaptability to take these giant companies on. As Colorado’s seventh market entrant, it has a head start on several of them that could prove advantageous in the long run.
How Important Is Responsible Gaming To Smarkets?
All Colorado sportsbooks are required to provide responsible gaming resources. Smarkets is no exception and it has state-of-the art processes in place to address it. “We have data scientists at Smarkets who have built machine learning algorithms to try and track if someone could potentially be a problem gambler,” Lemesre says.
The UK goes further and requires source of income verification if a bettor’s wagers seem suspicious. “If you’re a customer in the UK and you go over a certain threshold, you have to then prove to us where your income comes from and then prove that it is legitimate spending.” It’s a proactive approach that compliments the in-app options to:
- Set betting limits.
- Change loss limits.
- Adjust time out options.
- Join the self-exclusion list.
These options are easy to find in the account section of the app. “We don’t want to clutter things and confuse people,” says Lemesre.
It’s all part of creating an easy-to-use sportsbook that puts responsible gaming in the spotlight.
SBK’s Future In Colorado
In addition to its sportsbook development, Smarkets is also pursuing team partnerships in Colorado. “I know we’ve definitely had chats with the Broncos,” says Lemesre. That sounds exciting, but Coloradans shouldn’t get their hopes up yet. “We definitely chatted to them, but I don’t know of anything concrete that’s come out of it.” Such a partnership could allow SBK to offer contests that reward Broncos tickets like DraftKings’ Broncos partnership allows them to do. Such talks are an exciting hint at what could be coming down the line for SBK users.
In the meantime, Lemesre hopes to see more Colorado bettors give SBK a shot. “We’re hoping that once [bettors] go on the app that they go, ‘oh, this is pretty nice actually. Those odds are better than the ones I can see on DraftKings or whatever.’ And if they enjoy the experience, [and] they get better odds than elsewhere, then hopefully they come back to keep playing with us.”
SBK is available for download for Apple and Android devices. Bettors can see for themselves whether they think the hype around SBK is worth it.