Anyone who has studied person-to-person betting won't take long to figure out the key to a successful business plan in the P2P sector.
Liquidity is important to any bookmaking operation, but when individuals are the ones laying the odds and taking up sides in a bet, as is the case with P2P betting, bigger volume translates to bigger profit.
Although P2P betting continues to grow at a quicker pace than other corners of the interactive gaming industry, only a handful of sites have managed to become legitimate players. Two of them, Flutter.com and Betfair.com, merged late last year and under the Betfair name have continued to grow business.
Sports book operators have been slow to adopt the P2P platform for fear it could cannibalize their bookmaking business.
Thanks to a Canadian technology firm, though, online sports books everywhere can offer P2P betting without worrying about liquidity issues. 1X Inc. allows sports books to connect to a massive database with other books all over the globe and offer its users the ability to match bets with anyone else. The system works on a strictly confidential basis, and as long as users are registered with a sports book, there is no set up or fund transfer needed.
The Company
1X Inc. was founded in early 2001 in an effort to make the global sports betting industry more efficient and more profitable through the development and deployment of exchange-based gaming software.
The company was co-founded by John O'Malia and Anthony Novac.
O'Malia is a former derivatives trader on three different European exchanges and is the founder of the first financial spread-betting site on the Internet.
Novac developed land-based casinos and consulted with North American and European gaming companies for almost a decade. More recently, he worked as both a gaming software developer and an operator.
The company is privately held and recently exhibited at one of Canada's biggest venture capital fairs.
The Products
1X has developed two software products: SportMarkets and Pro-X. Both programs integrate easily into the operations of online sports book or casino operations.
SportMarkets is the company's P2P betting exchange. It is the only software that allows operators to integrate P2P betting without setting up new infrastructure on their site.
The application seamlessly integrates into any sports book or casino and provides its customers with direct access to a central bet exchange without the operator having to surrender any of its valuable user information. The operator, or "broker," receives a guaranteed, risk-free commission on each trade.
Another major selling point for the SportMarkets system is that it allows for P2P betting during the course of a game or match.
Most P2P operations strictly allow punters to match fixed odds on the outcome of a game, but with the SportMarkets system, punters can have in-game betting and futures betting, too.
Pro-X is a business-to-business anonymous exchange that allows sports books to actively manage their risk by trading positions on a given event in a bid/ask format. As access to the exchange is through a Web-browser, there is no integration required and few barriers to encouraging sports books operators to participate.
The anonymity of Pro-X is appealing to operators, too. They can manage their risk without their competitors knowing which side of the action they are heavy or light on.
The Future
1X Inc. is determined to corner the P2P market. Novac said the company recently signed its first licensee and has a number of other deals working. He said within a year they hope to have cemented deals with 10 of the 15 largest online sports books. Those deals, he said, would make the 1X Inc. stable the largest P2P community.
Novac said that once the company gets another group of licensees, it will have nearly twice as many players to draw from, compared with the Flutter community.
To further increase the liquidity of the system, Novac said, developments are already in the works to incorporate the system with online casino operators. He also said research and development is being conducted on a platform that would allow P2P casino-style games.
In addition to increasing its liquidity, 1X Inc. is also studying new distribution channels. Novac said any system that allows for in-game betting naturally lends itself to interactive TV possibilities. The company has looked at interactive TV as a future channel for its system, but right now Novac said the focus remains heavily on the U.S. consumer market. Interactive TV has been slow to penetrate the U.S. market, compared to Europe and in particularly the United Kingdom.