CEO and Founder of Smarkets, Jason Trost, joined Pro Trader, Caan Berry, to discuss the evolution of the firm and where his story began. 

When first establishing the basis for Smarkets, Trost identified a gap in the market for traders which he built upon and expanded into the sports betting space, as he noted when discussing the formation of the firm with Berry.

“The reason I started this business is I was first a stock trader and when I was a stock trader, I saw a website that would let people trade on the presidential election and I thought, ‘this is incredible that you can trade something that you can watch on the TV’,” he explained.

“I was and still am a political junkie and I thought it was such an amazing concept. Then I saw that Betfair was doing the same thing for sports and again, I thought it was amazing.

“But even with my professional trader head on – and I studied computer science at university – I saw that the pricing on sports was insane. The margin was insane and I thought that there must be a better way to do it.

“The reason why I like to tell that story is I started the company 13 years ago now and our aim has always been to bring financial technology to sports betting.”

However, Smarkets’ foundation is to address the pricing problems within the industry, along with some ‘questionable’ practices, as Berry highlighted.

“The main benefit of that is the price,” Trost continued. “The margin that people pay in sports betting is insane compared to the financial industry. That’s the main thing we’re trying to do but there’s also other things.

“There’s a bunch of nasty business practices that I’m sure your customers are very familiar with that we’re trying to help clean up. But the main thing we’re trying to do to fix betting is pricing models.”

When asked about why exchanges haven’t grown as forecasted and why customers still opt for the more traditional bookmakers, Trost identified a key issue with interfaces.

He noted: “Back when I started, I thought that the superior mechanics of an exchange would kick the butt out of the sportsbook but from where I’m sitting, my perspective is that the exchanges haven’t caught on because of the interface.

“I’ll hold our hands up and say that our interface is very similar to Betfair because we wanted to capture Betfair’s market share and bring them over to us. I think that if you show a classic exchange interface that doesn’t know anything about sports betting, they won’t be able to figure it out.

“Really good interfaces, no matter what industry you’re in, people should be able to look at them and figure it out.

“We have really good ideas on how to make that better but that’s one of the main reasons your everyday punter hasn’t switched from the high-street bookie to the exchange.”

Smarkets: Introducing financial technology to sports betting