Sporttrade CEO suggests linking tax rates to operator hold percentages as a potential idea for achieving fair competition.
In the ninth paragraph of an open letter to US sports betting regulators and legislators, Sporttrade founder and CEO Alex Kane summarizes his mission statement in two sentences:
"If the goal is to have as many participants as possible choose to compete in your regulated market, then you must make significant changes to your regulatory approach. You must consider making a sincere effort to welcome innovative companies into your regulated market."
Nearly seven years after the Supreme Court ruling allowed widespread legalization of sports betting, public discourse in this area has become noticeably negative. There is a high focus on the increase in gambling problems. A minority of legislators are seeking to repeal the legalization paths in their states. The threat of federal intervention is intensifying and becoming increasingly ominous.
Kane's open letter, published under the title "Straight to the Point," offers an alternative to all these negative messages. It acknowledges some of the increasingly serious issues in the industry. But it also points out the way forward and targets a brighter future.
Increasing number of unregulated platforms
Unlike major operators primarily focused on pleasing investors, Kane focuses on the customers. He writes, "Without players, there is no industry."
At the time of his open letter, the options for reaching customers outside state regulatory guidelines have increased unprecedentedly. Some operators use a "social gaming with sweepstakes rewards" model. There are also prediction markets regulated by the Commodity Futures Trading Commission (CFTC) that use a form similar to Sporttrade's peer-to-peer exchange betting. In addition, there are ubiquitous offshore books.
Kane writes, "If your goal is to maximize your market participation, then changes must be made: more and more players are moving to venues outside your regulatory scope."
At the end of the letter, he emphasizes, "Let me be clear: without thorough reform to create a realistic pathway for entrepreneurs to participate in your market, you will hand over more tax revenue, job opportunities, venture capital, and participant engagement to other regulatory frameworks."
