May 21, 2024

Enterprise JM

Do the Business

For these Minnesota tech companies, Super Bowl betting means big business

A record 31.4 million Americans are expected to bet on this weekend’s Super Bowl matchup between the Cincinnati Bengals and Los Angeles Rams, and a handful of Minnesota companies hope to cash in on the action.

Bettors are estimated to be wagering $7.61 billion on the game, a 78% increase from the 2021 matchup between the Kansas City Chiefs and Tampa Bay Buccaneers. Most of those bets are placed through legal gaming platforms and organizations.

Of those millions of bettors, 18.5 million are expected to bet casually with friends, based on data from the American Gaming Association.

“There’s no better or bigger social betting event than the Super Bowl, so one of our biggest things that we think we’ll get out of this is word-of-mouth acquisition,” said James Seils, co-creator of the BettorEdge app. “If you have a Super Bowl party with 10 people, and one or two people are using the platform, that’s where we expect to see the biggest benefit of this weekend.”

Although betting is not legal in Minnesota, it is in 40 states, allowing a market to support companies in other states. Other companies support trivia and more casual betting.

Minneapolis-based BettorEdge, a social app that lets users bet against one another, launched in 2021, one week before the Chiefs-Buccaneers Super Bowl matchup. Since its launch, more than 5,000 people have joined the app and over 14 million wagers have been placed on the platform.

Seils and co-creator Greg Kajewski are expecting the number of users to triple following Super Bowl weekend.

BettorEdge is mostly active in Minnesota, but also reaches Illinois, California, Florida, Texas and the New England area. Unlike a sportsbook, BettorEdge does not charge a fee. Users must attach a banking account to the app for placing bets and collecting wins. The money spent on bets is based on user input, Seils and Kajewski said.

In addition to betting on game outcomes, app users can wager on how individual players will perform. For the Super Bowl, users can bet on which team will win the coin flip.

BettorEdge generates revenue from selling ads on its platform and uses data generated by Sportradar.

Since the start of the 2021 NFL season, user growth for BettorEdge has increased between 30% and 40%, week over week and doubled during the playoffs last month, Seils said.

Most users are gained via referral. For example, more than 70% using the platform during Thanksgiving Day weekend came from referrals or word-of-mouth, Kajewski said.

Twin Cities entrepreneur Hunter Dansbury also created a free social sports betting app last year called ShotCaller. It’s a sports trivia-based app that people can play against others either in sports bars or other venues, or users can play from their own homes against people in other regions.

In the app, users answer multiple-choice questions or guess outcomes during live games. The user with the highest score wins prizes or gift cards to local restaurants.

For this year’s Super Bowl, Dansbury partnered with Afro Deli, a Twin Cities restaurant and catering company. One hundred gift cards totaling close to $1,100 will be awarded to winners who play in the app.

The negative economic impact of the coronavirusand social unrest following the murder of George Floyd inspired Dansbury to make the winner rewards community-based.

“Sports are intertwined in the fabric of our community and local businesses, and I feel like they need better solutions to prosper from this large sports betting boom that’s going to happen,” he said. “I feel like this is an opportunity for them to get some skin in the game.”

Dansbury plans to use geolocation technology so gift cards are matched to restaurants in respective regions.

For Minneapolis-based public company SharpLink Gaming, the Super Bowl is an opportunity to acquire new bettors and retain its existing customers.

SharpLink uses artificial intelligence to collect and analyze behavioral insights on those who bet on sports. The company uses that information to provide bettors with personalized content from leading sportsbooks. The goal is to convert those users into recurring, paying customers.

SharpLink now has more than 2.5 million players on its fantasy sports and sports betting online platforms through its network, sports league and media partner sites. Some of the company’s partners include BetMGM and Caesars.

Sporting betting could be a $30 billion market in the U.S. when it matures, SharpLink CEO Rob Phythian said. Of that, one-third will be spent on recruiting customers.

“Of those numbers, we just need 5% of that and we’ll be a several hundred million dollar market cap company,” he said.

Since June 2018, more than $95 billion has been wagered legally on sports in the U.S., generating more than $7 billion in revenue for sports booking companies and nearly $1 billion in tax revenue for states who have legalized it, according to Legal Sports Report. Sports betting is legal and active in 30 states and Washington, D.C., and legal but not yet operational in three states. Active or pre-filled legislation is on the ballot in seven states.

Since last year’s Super Bowl, 45 million more Americans can legally wager in their home state, per the American Gaming Association.

Phythian attributed the rise in betting volume to the expansion of mobile betting in more states, tapping a larger population that bets.

“The overarching premise that we have an insatiable appetite to bet and this is going to be a big market to be part of is coming true,” he said.