Ex-NY Bankers Launch Web3 Sports Betting Rewards Program
Posted on: October 27, 2022, 03:18h.
Last updated on: October 27, 2022, 03:40h.
A couple of ex-New Yorkers who left Manhattan after developing a sports betting hedge fund have taken that technology and turned it into a Web3 superwallet product. The wallet rewards users for the bets they are placing at their favorite sportsbooks.
Whether those bets are placed within New York’s borders or in neighboring states does not matter. What matters is that keeping track of everything is easier, and it comes with a rewards program. Think of it as universal frequent flyer miles for sports gamblers.
The brains behind Scrimmage are Dan Taren and Matt Dever, a pair of young finance savants who previously worked in Manhattan for Bank of America and Citigroup. In 2019, they exited Wall Street and launched a sports betting hedge fund, Fremont Capital Partners, out of Gibraltar.
Fremont employed a sports gambling approach of putting an entire bankroll into play over the course of time by making as many “edge” bets as possible on any given day, usually somewhere between 120 and 150, depending on what sports are being played, and then having that edge and that volume multiply exponentially over a long period of time.
“We found as many games as possible that we have a slight edge on, and kept betting, attempting to bet through our bankroll as many times as possible,” Taren told Casino.org. “If you have a 1% edge and you bet 100% of your bankroll, you have a 1% rate of return. But if you bet through all of your money 30 times and still have a 1% edge, instead of a 1% return you now have a 30% return.”
What Happened After Fremont Shut Down?
That is the stuff investment bankers and MENSA types can figure out with ease. The casual gambler? Not so much.
But like the statistical analytics people who have taken over front offices in professional sports, the quants also have a place in the evolving sports gambling universe. Turns out Sam Hinkie was a trendsetter when he was tanking for the Sixers. James Click of the Astros is another numbers guy who may not be on the same page as Dusty Baker, but the Astros sure do get results.
You got us? Bet. pic.twitter.com/KmyWxc8ODE
— Houston Astros (@astros) October 22, 2022
The guys who founded Scrimmage are cut from that same mold, sort of. But they are much younger (Dever and Taren are both 25), and they come from a generation that was getting out of college right when sports gambling was going mainstream in the United States.
The hedge fund was profitable, but also very complicated and time-consuming. Expenses were high, capital was difficult to come by, and staying compliant with different regulations was onerous – especially because they were based out of Gibraltar and were using offshore books.
“Matt and I asked ourselves: What if we took the infrastructure we used to run the fund and turned it into a B-to-C (business-to-consumer) operation?” Taren said. “What if we built technology to apply those same financial portfolio theories and gave it directly to bettors in the U.S.?”
That was how Scrimmage came into existence, helping bettors gain an edge by sourcing the best odds in the market, automatically syncing their real betting history, providing instant access to price changing news, and allowing for actionable notifications when prices shift. Scrimmage consolidated sports betting news and data for the everyday bettor.
But because Taren and Dever realized what they were doing was not unique (there is heavy competition in the niche odds companion tool space), they differentiated themselves by adding a reward component for their customers whether they win or lose.
The company uses Web3 technology and syncing capabilities with all of the major sportsbooks in New York (Fanduel, Draftkings, BetMGM, etc.) to offer sports gamblers a rewards program that gives cash back on the bets they are already placing. Does not matter if a customer has only one or two accounts or plays at 20 different sportsbooks in multiple states, which, as we have explained in our New York sports betting hub, is a major strategy New York bettors need to know (along with casino plans).
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What differentiates Scrimmage’s application from other companies that have developed bet-tracking software is an NFT component that incentivizes customers and partners with unlimited rewards that can be turned into cash.
“It’s like a loyalty program that costs the sportsbooks nothing and gives the sports bettor an opportunity to earn cash for their winning bets, and even earn a little something when they lose,” Taren said.
This novel, secret formula is the wager Taren and Dever are making with their product, which is still in the beta stage but has already attracted thousands of users.
But pulling in millions through mass adoption in a cutthroat industry is a challenge, and these young entrepreneurs recognize it and are prepared for it. They understand that the majority of gamblers do not want to put in the time necessary to make the proper picks. (This is why the handicapping business is booming). Scrimmage offers to do the dirty work for its users by integrating a sophisticated algorithm into its application.
The next challenge will be finding customers interested in getting paid a bonus on every one of their bets, and being able to turn those bonuses into more NFTs, or into cash.
“The game for us has to do with maintaining an edge,” Taren said. “That was how our hedge fund was operating. And with bettors, they do not want to spend the time that it takes to research what that edge may be…they want free information and free money.”
Centralizing Wager Info and Bet Choices Creates a Superwallet
“When bettors sync their accounts with us, they, in essence, get all of that. All of their data is in one place, and our sports gambling partners see their players rewarded with our tokens, which can rise in value and can be exchanged for US dollars. So, everyone can win, even though everyone cannot win every bet.”
Most young folks would be happy landing in the New York banking industry and living in FiDi, as Taren did, or in Hell’s Kitchen, as Dever did, and enjoying the nightlife that comes along with living in a bustling metropolis.
Not these guys.
New York Black & White photos: Battery Park and the Manhattan Financial District #nyc #newyork #newyorkcity #Manhattan #Brooklyn #212 #ny #BlackWhite | https://t.co/ne1OAqQ2Es pic.twitter.com/zosZjTMEHV
— Metroscap.com (@metroscap) October 23, 2022
Some people and some companies are just wired differently, and these guys were thinking biggest, not big.
And then there is a human-interest component from the Scrimmage team, an incredible story about how their software developer in Ukraine was hearing on his Eastern European local news outlets in February that a war was not imminent. But Taren and Dever pleaded with the 21-year-old to get out of Ukraine as quickly as possible, and Yevhenii Rachkovan listened and made his way to hostel after hostel across Europe, then to Mexico, then across the US border. He eventually made it to Los Angeles, where he is living while positioned as the lead developer on the Scrimmage team.
So, these guys are pretty exceptional, very analytical and calculated, and have seen markets develop more quickly than others.
Where they are going is where sports gambling has a missing element. Taren and Dever haven’t missed on many of their career aspirations, and it would be foolish to bet against how they are positioning themselves in the New York sports gambling market and beyond.
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