The first exchange to launch in Ontario’s regulated market for sports betting sites has big plans, including a vision of helping turn Canada’s most populous province into a global “hub” for wagering.
STX (pronounced “stacks,” not ess-tee-ex) launched in the Ontario sports betting market in late July, making it the first exchange to debut in the province’s still-young regulatory scheme. That market opened in April 2022, allowing multiple private-sector operators of online sportsbooks and internet casinos to take bets in Ontario.
After starting with wagering markets for baseball, STX is gradually increasing what’s available for users on its platform. NCAA and NFL football contracts are now available — moneylines, spreads, and totals — and STX founder Justin Deutsch told Covers more markets are coming, including props and futures.
“Our focus is going to continue to be liquidity first,” Deutsch said in an interview last week. “And then as we get liquidity and demand for it in those new market types, we will be able to quickly release those. I would say early 2024 at the latest.”
More anything? More everything!
More sports are also part of STX’s plan for the future. So, too, is dabbling in other types of events, such as political betting, which is legal in Ontario and which would be similar to a platform like PredictIt, albeit perhaps on a grander scale.
“We are currently implementing it and it should be in the hands of Ontario bettors within, I would say, a month,” Deutsch told Covers.
The CEO added later that STX views itself as a tech company, not just a bookmaker, that could apply its exchange model to a variety of other things.
"We're starting with sports betting because we believe it's the most ripe for innovation," Deutsch said.
Is Sam Howell the best QB to play in D.C since Shane Falco?? Get the BEST price on the Commanders -6.5 (+109) at STX!https://t.co/ba43huK2u3 pic.twitter.com/870CEBeADk
— STX (@stx_app) October 5, 2023
The growth plans must still fit within Ontario’s regulatory framework, which is unique in Canada and requires all players to be in the province. That requirement has dealt a blow to fans of daily fantasy contests and poker, as it shrunk the pools of potential players and even prompted DFS operators such as DraftKings and FanDuel to shutter their fantasy businesses in the province.
Ontario Attorney General Doug Downey acknowledged this past summer that the "liquidity challenges" facing Ontario's iGaming market were on his radar. In the meantime, Deutsch said the geographic restrictions have made for slower progress. But STX (and probably others) continue to speak with Ontario regulators about expanding the province’s horizons, albeit with no guarantee it ever happens.
“Our focus is more on a long-term strategy of let's create free-market principles in a regulated environment, where we can get true global liquidity to recognize Ontario as the hub of, call it, institutional sports betting at some point,” Deutsch said. “That is really game-changing for the industry, rather than just being one of another 52 sportsbooks to enter the market and compete for those same dollars. We’re really trying to focus on growing that pie.”
If the price is right ...
The STX exchange allows users to buy and sell contracts for sports outcomes, such as the Washington Commanders winning Thursday’s NFL game. Prices of those contracts fluctuate between $0 and $100 before the game ends, at which point those holding the contracts will either get paid the full $100 — say, if the Commanders win — or nothing — for instance if Washington loses. STX makes money by taking a small cut of the winning wagers, although it's examining other possible revenue streams, such as a commission-free subscription model.
Still, the exchange is a model that attracts a sharper type of customer, as it caters to someone who is very interested in getting the best price for a bet and is willing to go beyond the standard sportsbook offering. The average “bet” on STX is around $1,000, Deutsch said, which is likely far more hefty than what other retail bookmakers are handling.
One reason why STX is gradually adding new markets is to showcase the benefits of the exchange system, according to its founder. The NFL already has some of the most efficient lines and odds in the world because of how much wagering there is, but Deutsch said STX’s model of buying and selling contracts means some of its markets will have “materially the best price available” on one side or the other for a game.
Ultimately, users of more recreational sportsbooks could mature enough to seek out the type of price discovery that STX offers. Ontario also happens to be one of just a few jurisdictions that permits the exchange model.
“Our mantra from day one is … we want to cater to everyone and anyone who can bring liquidity to a marketplace,” Deutsch said. “And because of those things that we offer, the toolkits we offer, the experience, the interfaces, that brings price more competitive, and when the price gets more competitive, then retail [players] are more incentivized to come play.”
