Ian Peacock, founder of sports betting app Bait, on the loophole that allows US residents to wager real money against each other
Q: So what is Bait and how does it work?
A: Bait is a sports betting platform for iOS that lets users bet on spreads, moneylines and totals across a variety of sports. It syncs with your phone’s contacts, allowing you to bet against other Bait users who might want to take the opposite side of a wager.
For example, if you thought the Carolina Panthers would cover the -3 handicap in the opening game of the NFL season, you can challenge your friends to take the other side of the bet (i.e letting them back the Denver Broncos +3).
Players can message and trash talk through the app while the game is going on, and Bait automatically notifies the winner and loser once the game ends. The loser then clicks the ‘pay’ button, and they’re taken to the winner’s Venmo page.
The catch is that that the loser is not forced to pay up which is why it’s legal.
Q: How did you come up with the idea?
A: I came up with the idea in college. I was in a fraternity and every weekend all my buddies would go through the house betting against each other on college football. And it wasn’t just us, it was every fraternity on campus. That set off a lightbulb in my head. Why wasn’t there an app that would let us do this electronically without all that cash changing hands?
So I did the research, to see what was legal, and I came across a loophole. All the laws are focused on the existence of risk. So the idea of not having to pay up if you lose essentially removes the risk
I use the example of going to a casino, and being told you are allowed to keep any chips you lose. If that’s the case, are you actually gambling? For me the answer is no.
This idea is very new but all the lawyers I talk to say gambling would have to be legally redefined on a federal and state level to shut this down, because those laws all contain language about risk.
We’re learning from the legal mistakes people have made in the past. We are determined to stay inside the law and provide something that hasn’t been done before and make betting more fun and social and less intimidating.
Q: And who is the target audience for this?
A: College is going to be a key target for us. That’s the market where FanDuel and DraftKings have excelled, but where I think we can really set ourselves apart is the social media aspect. You can see what your friends are betting on, you can message them through the app, and we are linking it to Venmo so payments are very easy.
Q: How are you going to monetize the platform then?
A: We thought about a commission model, which appeals to investors but we legally cannot take a cut because that would qualify as bookmaking and that’s got other people who’ve gone before us in trouble. Instead we will try and make money from advertising.
Q: Perhaps most importantly, how can you convince people to pay up when they lose?
A: We implemented a rating system in the app, which is based on your pay up percentage. If you don’t pay up it will be clearly defined in your profile and people won’t bet with you. I think the rating system will keep a lot of people honest and if it doesn’t, then at least people will know that.
It helps that you’re betting with people you know. It’s people whose phone number you already have and I’d expect a bit more honesty between friends than strangers. At the end of the day it’s supposed to be fun rather than intimidating, which gambling is to a lot of people.