A sports betting app backed by Reddit co-founder Alexis Ohanian and Tinder co-founder Justin Mateen has a pending application for sports betting in Tennessee, per a report from Bloomberg/Fortune.
The app is called Wagr, and it isn’t live yet in any U.S. state. The startup reportedly is in a $4 million seed-funding round, with Ohanian investing in the company through his venture capital firm Seven Seven Six.
Wagr is looking to offer peer-to-peer sports betting in the Volunteer State and beyond. It also has sports betting paperwork pending in Virginia. ZenSports, another company eyeing a peer-to-peer product, is also looking to launch in Tennessee. There currently are seven sports betting platforms live in Tennessee.
State regulators have yet to approve peer-to-peer wagering, but that is expected to be in the pipeline after state officials made sure it could square with tax provisions in the 2019 Sports Gaming Act. While ZenSports plans to offer traditional house-versus-player sports betting in the meantime and alongside its peer-to-peer product, it’s unclear if Wagr plans to do so as well.
Peer-to-peer involves gamblers creating and betting in markets between other users, with the platform taking a rake of some kind for facilitating or hosting the wagering.
Former Caesars Entertainment CEO Gary Loveman reportedly is an adviser for Wagr, founded last year.
How does it work?
Wagr will look to blend betting with features that resemble a social media platform. Its bare-bones website gives a small glimpse into what the app will look like.
It doesn’t look especially innovative based on the animation on its website, but it seems like another important advance for the sports betting product. If it takes off, it seems likely competitors would look to clone the features for their respective gambling apps. That may actually already have started.
“It’s about productizing what already goes down in everyone’s group chat, which is wagers between friends about sporting outcomes,” Ohanian told Bloomberg. “Right now the way these get resolved is through a Cash App payment or a Venmo payment on Monday, and surely we can do better.”
If a bettor on its platform doesn’t find someone he or she knows to bet with, Wagr will match the bettor up with someone else in the state looking for that wagering market. Wagr would not be able to match bettors from different states, as that would run afoul of the 1961 Wire Act. The inability to connect sports bettors between different states could be a major roadblock for Wagr’s chances to capture market share.
Wagr reportedly plans to charge a fee to use its service. Traditional sportsbooks don’t have fees for simple platform use, but instead generate revenue from the vigorish.
Wagr plans to limit peer-to-peer bets to $500. It appears that is less to do with responsible gambling and more in an effort to lean into marketing the platform to casual bettors, rather than diehards.
It doesn’t appear Wagr has plans yet for online casino gambling, which traditional sports betting apps offer in markets that allow it. Sports betting is a low margin business, with online casino being more lucrative.
Trying to make gambling less asocial
The industry is well aware that social media will play an increasingly important role in attracting new players and keeping them engaged in the broader attention wars. A recent study from HPL Digital Sport found, unsurprisingly, that social media is a big factor in the overall betting experience for younger users.
“The social experience of sports betting for Gen Z and Millennials is heightened even more when looking at how they view social media content compared to the Gen X and Boomer markets,” the study said. “Both Gen Z and Millennials (38%) noted social media that drives them to engage with the brand is a leading retention factor. Gen X (22%) and Boomers (14%) however don’t see the value in social media and listed it at the bottom of their priorities.”
DraftKings has made an early foray into combining social media with gambling, possibly in response to moves by a potential heavy hitter like Wagr. DraftKings, arguably the top online sportsbook in the nation three years out from the 2018 U.S. Supreme Court ruling, announced the “DK Social product” in May.
“The [DK Social] product is particularly unique because it amplifies our ability to create an interconnected ecosystem across our consumer products.” pic.twitter.com/Z4OcSMCppv
— DraftKings News (@DraftKingsNews) May 7, 2021
The features on DraftKings appear to resemble what Wagr is trying to bring to market, though it looks like DraftKings has yet to formally pursue a peer-to-peer sports betting product, akin to what Wagr and ZenSports are trying to pull off. WynnBET, another sportsbook live in Tennessee, is also planning social media features on its platform. This could just be the start of a trend for the industry.
We are announcing the upcoming rollout of social functionality to our DFS and mobile Sportsbook apps, marking an industry-first innovation to create an integrated social community across sports betting and daily fantasy sports #DKNGEarnings pic.twitter.com/FKH3F4TbrW
— DraftKings News (@DraftKingsNews) May 7, 2021
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