ZenSports, an upcoming online/mobile sportsbook in the state of Tennessee, has secured additional funding to help fuel its U.S. expansion.
ZenSports is primarily known as a peer-to-peer betting startup, but it will offer traditional bookmaking in Tennessee. Regulators appear unlikely to allow peer-to-peer betting in the near-term, and it might require a change to the 2019 Sports Gaming Act.
In the meantime, ZenSports announced Thursday the close of its new $2.4 million in Series A funding. Investors in this round include Gaingels, MicroVentures, Calm Ventures, Twenty Five Ventures, and Allied Ventures Partners, as well as other individual angel investors.
Expansion plans in nascent U.S. market
“The new round of funding will be used by ZenSports to complete its current U.S. gaming license applications that it has on file in Nevada and Tennessee,” according to the presser. Colorado is the third U.S. market where ZenSports has made progress on entering. The sportsbook startup recently signed a partnership deal with Boulter Developments to “eventually expand into Colorado.”
In Tennessee, it costs $750,000 annually to operate an online/mobile sportsbook. Fortunately for books, they don’t have to partner with an existing retail gambling facility, as Tennessee doesn’t have any casinos.
ZenSports told TN Bets late last year that it prefers a higher annual fee over needing a partner.
In Nevada, ZenSports signed a deal last summer with Strategic Gaming Management for the option to purchase the Big Wheel Casino in Lovelock, Nev. Completing the process of receiving a license from Silver State regulators will allow ZenSports to offer gambling statewide over the internet. ZenSports predicts approval in Nevada late this summer.
“As a startup, competing with large, well-funded competitors is never easy,” ZenSports CEO and co-founder Mark Thomas said in a statement about being the small fish at this stage in the game.
“But based on our international traction and product-market fit over the past two years, we believe that ZenSports offers sports betting customers the most amount of choices in how they bet, complemented with a beautiful and clean design. Over 50,000 bets have been accepted through our app since we launched internationally two years ago and we’ve processed over $45 million in betting volume. We’re super excited to replicate this traction as we expand into the U.S. and this round of funding will help accelerate our entry into this market.”
Competition in Tennessee
It’s unclear when ZenSports will receive an operator license from the Tennessee Lottery. There are currently five operators in the state, with others on the way. Through the first three months of wagering, the books handled more than $520 million in wagers.
ZenSports will struggle to wrest market share away from the likes of DraftKings, BetMGM, and FanDuel, but it’s a long game for sports betting. ZenSports’ core product, peer-to-peer, will take longer to roll out. For regulators, it’s mainly unclear how that style of sports wagering would be taxed.
No state in the country has yet allowed peer-to-peer sports wagering, from ZenSports or anyone else.
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