Prophet Exchange, a peer-to-peer sports betting exchange that has been live in New Jersey since August 2022, is trying a novel marketing approach to persuade mobile sportsbook users to try out exchange betting.
Prophet is encouraging would-be customers to bet on DraftKings, FanDuel, and other sportsbooks that offer daily boosts. Why? Because Prophet Exchange is creating a market on the other side of the boost to guarantee profit for the bettor. Yes, the Prophet Exchange team is encouraging users to engage in arbitrage and directly leverage wagers placed at other sportsbooks.
“We don’t care about arbitrage,” said Dean Sisun, the co-founder and CEO of Prophet Exchange, which uses market makers to ensure liquidity before posting its own boosts. “We don’t take any risk. If someone is trading on our exchange and laying off prices with us, it’s just volume for us. Plus, it gives us liquidity for other people to go and bet. At the end of the day we are purely a liquidity exchange, and any sort of volume that comes in, we welcome.”
As for using the more established sportsbooks as part of the marketing play, “It’s based on the principle of using our competitors’ war chest against them,” said fellow co-founder and COO Jake Benzaquen. “We look at things from a very different perspective over here. Obviously we thought there would be a marketing component, and we’ve been thinking about doing this for some time now.”
DraftKings declined to comment for this article, and emails to FanDuel were not returned.
The other side of the boost
As an example of how the “Prophet Boost” works, look at Monday night’s Eastern Conference Game 7 between the Miami Heat and the Boston Celtics.
FanDuel was offering the following boost: Jayson Tatum or Bam Adebayo to make the first basket at +300. Prophet Exchange offered the other side of the bet — anyone but Tatum or Adebayo to score the first hoop — at -250.
FanDuel allowed a $25 maximum on the wager, and if someone bet the recommended amount on both sides, they’d walk away with a guaranteed profit of $3.57.
Today’s guarantee Prophet’s total $9.03.
— Prophet Exchange (@ProphetExchange) May 29, 2023
No one is breaking the bank here, but the Prophet Exchange leaders see this as an opportunity to showcase their product to more recreational bettors.
“It’s really a way to drive a potentially different type of user — plus it gives us more volume — during a down period in the sports calendar,” Benzaquen said.
Down the road
Prophet often has the most customer-friendly moneylines due to the commission-based nature of the product (the operator takes 2% of winning wagers). And Sisun expects the betting exchange to really pick up steam in the New Jersey sportsbook wars come this autumn.
“Things are largely looking up,” he said. “We recently closed a [funding] round, which was very exciting and also a little relieving. It’s good we don’t need to focus on fundraising for a while and just look at building up our product and customer base.”
And that’s the phase Prophet Exchange is in now, Benzaquen said. The operator is updating its KYC methods to make on-boarding easier, will be introducing PayPal and Venmo as methods of payment, and, perhaps most importantly, will be rolling out its live betting markets in time for the NFL season.
Sisun said Prophet is concentrating on New Jersey for now, but if all goes well this NFL season, it plans to branch out to other states with some speed come Q1 of 2024.
And as for these arbitrage boosts?
“We’ll be running them for a very long time,” Sisun said.