hello viewers and welcome to the latest episode of the Huddle I'm Las Vegas correspondent Brian Joseph and I'm here with Jacob fortinsky the co-founder and CEO of the sports betting exchange novic Jacob thank you for joining us to start to start can you tell us about your background and and how your professional experience LED you to co-found novic sure um so I'm fairly young so I don't have the most extensive professional experience but uh I graduated from Harvard a couple years ago where I studied philosophy political science and economics uh as a child I was very mathematically inclined always thought I would go into Financial trading or get a PhD in something uh got to college decided to sort of uh get more into politics worked on a couple campaigns then went into banking worked at a hedge fund and then my senior year of college decided to uh start noig sort on the side was very uh serious uh playing poker you know I'm trading on prediction markets got into sports betting saw some serious problems with the industry and set out to build what I viewed to be a better solution a better model and started the company with a close friend of mine uh whom I met at school and we've been working on the company for the last three years it's a very Facebook esque uh uh uh origin story working on it while you're at Harvard well yeah we graduated though so at least our you know we were my my parents forced me to I took a semester off actually during covid um when I was starting brain starting to brain brainstorm on the idea and I wanted to not go back but I was forced to well hey you at least got that degree yeah so tell us a little bit about novic it's a sports betting exchange not a sports book in the US how popular are exchanges versus traditional Sports books yeah that's a great question so it it's very early days in in terms of us sports betting in general but especially with regards to exchanges uh as I'm sure you as as I'm sure you know and many of your viewers know sports betting exchanges have been uh been quite popular in Europe for some time um but they're not really much of a thing in the US I think the average Sports better in the US doesn't even know what an exchange is let alone know that there are sports betting exchanges that they can bet on um there are a couple other competitors in the US there are couple in Canada um but you know I what we're trying to build is not necessarily just the best exchange we're trying to build the best sports bending app period and we think building it on an exchange platform is by far the best way to do that from both a company sort of profitability perspective as well as from a user experience perspective uh we just went live in Colorado this week which um is our first Market very excited about and the idea is basically you know to prove that the model works there and then expand into a dozen or so other states next year um you know I think we're differenti apped from both other exchanges but also from other sports spending apps for large in that one we're really trying to introduce the the most Cutting Edge Financial exchange technology from the world of Wall Street and other Financial exchanges and my co-founder worked at as a highfrequency Trader previously and you know I think uh much of our team is comprised of people with similar backgrounds and I think we're really trying to enable programmatic trading sort of the future of um what we view to be the financialization of sports betting I think you see large Sports Bing operators move away from trying to compete on price they're trying to increase their margins not decrease them and I think as that happens you know the differentiation between um exchanges like ours and the leading Sports Bing operators will become more apparent to users and I think the second novel thing about what we're doing is we're really Shifting the fundamental business model of the industry away from one that charges everyone in discriminately whether that be through a vig sort of the the cut the juice taken by the house or um commissions which is how other exchanges generate revenue revenue instead we're making it entirely commission free for casual better so you and a buddy each put up $100 on a game winner gets $200 we don't take a cut from that and we generate Revenue by charging market makers institutional Traders professional bers so essentially charging the top one or two% of earners on our platform rather than charging everyone indiscriminately so basically we can say to our users we only make money to the extent you make money whereas all other sports vending apps make money to the extent you you lose money it is a a big diff differentiating uh Factor there for people that might be unfamiliar with uh with noig and exchanges in general can you just sort of walk uh our our listeners and viewers through what um how exactly noig works yeah so well first I guess before I explain how noig works I'll I'll first just say that when we we went live in Colorado essentially as a low viig sports book we're rolling out some of the exchange features in the coming weeks um so what I'm about to explain is sort of how it it'll work in 3 to four months from now um but the idea is basically we um are enabling all users on our platform to not just be price takers but to be price makers so instead of just seeing these are the odds um take it or leave it you can actually say oh I want to offer this price so it sort of works the same way NASDAQ works or Ebay works you know you go on to let's say eBay you see you you're buying a pair of airpods you can you know buy instantly at 12 or or sell instantly a 90 if you don't like either of those prices you can say I'm willing to sell for 100 or I'm willing to buy for for 110 and hope that you're offer gets taken so that's essentially the same type of experience that we're introducing to sports bending you you know you can basically think of it as we're empowering everyone to be their own house so instead of saying should I take minus 110 on this side or minus 110 on that side you can actually be the one to say I'm willing to take minus one5 on either side and just collect a spread the same way the Sportsbook does and we're basically Crea creting public price Discovery so it's the same way the stock market Works more people buy one side price goes up more people sell or buy the other side price goes down so it's not really some back room sports book that's pricing these markets we just allow our users to um basically determine the price of every single Market that's that's fascinating and I I know for um you know a well-versed uh Sports better that that's going to be appealing how do you sort of educate the the more casual fan to to what you're describing because I I can imagine buddies you know trying to explain that to them and they'd be totally lost yeah I think that's a great question so the first thing I would say is that you know the sharp bers the price sensitive bers are going to find the best lines wherever they exist they're already line shopping and uh many of them are limited from the large Sports books which is actually sort of part of the origin story of noig was I saw lots of my friends getting limited by Sports books simply for making money so we're trying to provide an outlet for profitable bets to bet without limit um but for the Casual better I think you know we're really trying to um not rely too much on education I think what we're trying to say to the the sports bets is we are the first and only commission free sports bending app we are providing you the same experience you're getting from all of the large operators except we're doing we're giving you a better price so whether you're losing money or you're making money we're putting 1 to 3% back in your pocket per bet um at least that's the goal and you know with the beauty of exchanges is that you have tremendous Network effects so the more people we have using our platform the the the tighter the spreads will become my co-founder Ki likes to say trading begets trading that you know when we have more people on the platform the tighter the spreads become the more we're differentiated the more future us users we attracted and so on until our spread the equivalent of a bit ask spread is effectively zero where you know you in a super uh liquid market like the Super Bowl you can have minus 101 or minus 100.5 on each side so that you know instead of paying 8 and a half% per bet which which is sort of the average VI in the industry you're paying you know sub two or 3% that's incredible yeah I mean I again I can see the you know the the experience better the the the sharp better as you put it you know really you know sinking their teeth into this but you know the Casual guys you know the guys I drink beer with I uh I have a hard time believing that they they'd wrap their mind around all that you me they're so used to the uh the sports book experience of just you know these are the odds and these are my options um but you said you're not you're not really going to be relying too much on uh on educating uh your users at least initially on on on what you guys offer is that correct yeah I think like I said we're really just trying to be the best sports betting app period we're trying to have better prices better user experience better you know withdrawal better uh deposit better customer experience customer support and so on so I think like really what we're we we don't it doesn't it's not like we want all of our users to even know we're an exchange like we want people to just download it because they're like oh heard this app is awesome that they have these cool rewards and contests and competitions and they have great odds and you know it's not like we necessarily need people to to be 100% believer in exchanges we want people to download us because for the same reason they choose you know export spending app over why sport spending app gotcha you it sounds like you're you're trying to hit it from all angles the the really uh deeply experienced and also the the Casual fund better too that's that's what's really smart as I understand it you have a a pretty well-known investor is that correct uh yeah I mean we're lucky to have raised from uh a number of pretty well-known investors I think the the average Sports better probably is uh most familiar with Joe Montana who's um an investor of ours been a pleasure to get to know him and to um to to talk to his family and so on um that a really cool experience um and yeah also you know our our primary uh our biggest investor Lux capital very well-known um new york-based Venture Capital firm uh we went through Y combinator which is a startup accelerator program which has incubated many notable companies like Reddit and coinbase and Airbnb um so really got to talk to uh you know an incredible um range of advisers and mentors like Sam Alman and um you know the twitch Founders and Paul Graham is an investor of ours so um you know I think we have taken somewhat of an outsider approach you know we chose to raise money from more typical Silicon Valley investors rather than people from within the industry for a number of reasons um and you know I think we have deep respect for lots of people in the industry uh in in various corners of the industry but I do think that we strongly believe that the industry has to evolve in in a number of key ways and the best way to do that was to um you know I think rais from people who whose visions of the industry were aligned with their own and were more comfortable Tak taking a contrarian perspective how did you get hooked up with Joe Montana um sort of a funny story but I I I uh is that this like barbecue in San Francisco I met Paul Graham who's sometimes referred to as the the father of Silicon Valley and he he's personal friends with with with uh with Joe and was able to make that introduction um you know I was a little star struck U meeting him but um I was a little less nervous actually pitching him than others because I I knew he I sort of going into the meeting I uh sort of knew that he was interested so um you know it was it was a fun experience but I sort of had to put on my take off my sports fan hat and put on my my Founder Hat and um keep my emotions in check I mean you you in my book he's the he's still the goat of quarterbacks so I uh consider me impressed I I grew up like a a Die Hard Patriots fan and Michigan fan and even more than those as as Die Hard Tom Brady fan I had like a fat head and everything so um I think I have to keep my opinion to myself as to who's the goat now I'd say they're two two goats fair enough fair enough now you you mentioned earlier that uh you you recently uh uh got started in Colorado what are your plans for this sentennial state you described it a little bit starting off with a low Vig moving to moving to your no noig model kind of lay out for us you know your timelines your plans that sort of thing sure so uh um yeah so right now in order to provide liquidity to actually um offer odds on on our platform you need a license with the state um we need a vendor major license and they I I would say The Regulators are very open and um excited by um the prospect of fully legalizing exchanges but because it's such a new and Innovative type of of wagering they um they they're in the process of drafting and approving new regulations as to apply to exchange changes which will um hopefully pass within the next two or four months um this has been sort of like a an 8mon long process working with them and um I think we're I'm very happy with where with where we're at and um sort of the status of those conversations that will sort of PVE the way for um us to really open up all of the the uh aspects of our app that we've built but there are a number of things so like right now we just have total spreads and um sides for the major markets so college football NFL NBA NHL MLB um we're rolling out college basketball next week tennis and soccer within the next two or three months we're going to be the first uh um exchange hopefully to have parlays which is something that we've built which um we're excited about same game parlays player props team Futures we're going to have contests similar to you know like circus Survivor or other more peer-to-peer uh head-to-head uh competitions um of course this is all subject to regulatory approval but um you know I think we really I think have assembled a a quite a sharp team and we're excited by a number of things internally that and and the ones I mentioned those are sort of only the the tip of the iceberg in in terms of things we've built and can't disclose everything but I think we really have some quite novel ways of betting um we can have exotic derivatives of certain types of markets and um some other pretty exciting stuff and we're in the process of onboarding different market makers so we'll have even more institutional Capital um High limits um really trying to be the the the primary really the Clearing House of liquidity in the sports bending space where you have other sports books even offloading their risk on two-hour exchange and um you know really pioneering some some B2B Solutions as well but you know I would say that we um we really have quite a maximalist view of markets we really want to allow people to bet on whatever they want to bet on and that you know the the the challenge with exchanges is that you need to have a critical mass of people you need to have make sure you have enough activity so we'll sort of start off slow in the areas that most people are you know interested in betting and then as we get more users and more volume and we expand to more more states in the coming months um will start to offer more and more products and yeah I mean I I think we we believe we're um really can go head-to-head with anyone in the industry uh obviously we're we're we're small and we're young but um you know I think that sort of the proof is in the pudding and I think that we'll be able to have better prices and compete on all the other aspects that matter to users you mentioned other states and you mentioned earlier your plans to expand other states I you know don't want to don't want to put you in a position where you're you're revealing any uh any proprietary information but can you talk a little bit about your the other states you're looking at your plans to expand Beyond Colorado yeah we we have um well I I don't want to say any specific States just in case those don't happen but we're we're actively looking at about a dozen states and also a couple um other markets outside of the US and I I think right now we're we're pretty heads down just focused on on Colorado I think if we're able to prove that it works there and uh attract a sizable chunk of the betting population there then I think it'll be uh that'll really streamline the process of expansion so I think it you know we'll hopefully get into another couple markets by the end of this year and then next year really get in you know change gears to focus on Geographic expansion how did you decide to start in Colorado well I'd say that Colorado's a state that first of all has an amazing Sports culture um two there was a sort of regulatory pathway in terms of Market access as well as um openness to exchange wagering uh and also Colorado is uh has a number of price sensitive bers um who I think really are quite eager for a platform like the one we're building and lastly I'd say Colorado just has a culture of of innovation you know there a number of areas where they're the first to legalize X or Y and I think that um you know it's very business friendly people are excited to try new products especially ones that I think are bringing something new to the table and um you know I just coincidentally I also had the idea while I was skiing in Colorado so it sort of felt full circle and kind of fitting to start there and you know yeah I mean we're it's uh it's unfortunate we have people all the time you know hitting our line being like when are you coming to Illinois or New Jersey or or or wherever and uh I wish I could say oh we'll be there in three to six months but as I'm sure you and your listeners know it's uh it's not a such an easy process to to expand geographically and it's something that we're we're trying to take lessons from people who I think spent all of their budget on on expanding and do it in sort of a smart and um cautious way well that makes sense and it's certainly certainly difficult to predict how long it's going to take to get approval in one state versus another there's obviously a lot going on in the sports betting world in the United States right now you got daily fantasy you got traditional Sports books we've got new entrance like you we' got other you know flavors of a sports betting apps where do you see this all heading yeah you know I I don't have a crystal ball I do think I do have some strong uh takes on different aspects of the market I mean I have a lot of respect for the daily fantasy world I think that's where you really see the most Innovation um I personally you know I'm an active user on a a couple of those platforms but I I do think that the overwhelming majority of sports bets are more interested in betting on teams than on specific players and um so as a category of course they regulatory challenges in that space but um on the whole I really do think that their their their market cap is is pretty capped um just given the sort of Niche nature of betting on on players um I yeah I think that it's it's with traditional Sports books yeah obviously with fat Fanatics and ESPN bet entering the market you you have a lot of people willing to spend lots of money so I do think some of the second or third tier Sports books are probably going to exit or you know wind out operations in um certain ways but you know I think at a high level I think there's still very little product differentiation in the uh among Sports books you know the analogy I like to use is it's like deciding which casino to go play Blackjack in you know it's like the same game wherever you go your decision comes down to convenience or you know where your friend is telling you to to go but it's not like you're really just deciding based on the actual merits of the game and what we're trying to do is change the fundamental rules of the game provide more value to our users provide a more fun Bing experience provide a more social Bing experience and so I really do think that the best product will win out I think there's only a certain amount of time that you can you know spend hundreds of millions of dollars on you know these free bets and bonuses and promos and I think when everything shakes out you know it will be very difficult for sports books to compete with exchanges we're basically going to cut out the middleman allow people to bet directly against one another assume no principal risk ourselves so that there's less operational overhead and it's just a much cleaner business model and you know it's sort of like the same way that you know taxi companies aren't able to compete with Uber and lft I think it's going to be similar type of transformation in the sports betting industry whether that happens in the next 3 years or the next 15 years it's sort of hard to predict but that's that's where I believe the Market's headed that's interesting you mentioned your respect for for people in the in the industry um and you also mentioned you know you wanted to be uh you know user friendly and uh and appealing to to to users in general I'm just sort of curious I mean is there is there any particular sports betting exchange whether in the United States or elsewhere that that you admire and and why well I I would first say that I I respect for anyone who's innovating in this space um the other exchanges you know the two in New Jersey I I you know I know they're Founders and have a lot of respect for them and and like them personally and all the European exchanges as well um you know we've definitely looked at bet fair and smarkets as examples in certain regards whether that's with pricing or you know uiux or what or whatever ever it is um strategy with regards to Market making or Revenue models um I also just have a lot of respect for people who don't just copy other people's prices who are who sort of directionally are opposed to um the consensus View and who do pricing internally and I think you know of course they um there there's certain price shops that are much sharper than others but I think anyone that is not just looking at where their peers are at and copying their pricing but are you know basically you know have confidence in their own models um whether that's you know Circa or Pinnacle or whoever I think those are the people that we're really trying to emulate and um yeah I mean it's sort of another division of our company that we have our own internal Quant research and our own um internal um trading teams so that we're not Outsourcing you know the same way a lot of other companies are and uh you know obviously it's a higher risk play but I think the people I have the most respect for are people that are willing to take big risks to try to change the the status quo it's fascinating you you guys have really clearly uh thought this through very deeply uh Jacob thank you for your time it's been a real pleasure speaking with you yeah thank you so much Brian it was a pleasure being on