When Mark Thomas set out to create ZenSports, a mobile peer-to-peer sports betting product, he continually went back to a saying commonly tossed around in technology circles: “If you’re going to build a technology product and be successful, it needs to be 10 times better than anything else out there.”
So Thomas and his small team decided to forgo building a traditional sportsbook website, focusing rather on a strictly mobile platform. ZenSports would use cryptocurrency and blockchain technology to expedite the betting process. Most significantly, there would be no bookmaker.
“The bookmaker is like the biggest middle man in the world,” Thomas tells Gaming America. “They’ve been around forever and they charge huge fees. What can we do is disintermediate the bookmaker.”
ZenSports was designed as a global marketplace for sports bettors where customers can create or accept bets and submit results all without an intermediary. The app divides bettors into roles of makers or takers. Makers create any type of bet they’d like, set a maximum wager and wait for a taker to review and accept their wager.
Bets range from traditional over/under and moneyline to props, like what color uniform a team will wear. A taker has the option of accepting a bet at maximum amount or less.
Unlike most sports betting products, ZenSports asks the maker of the bet to also submit results. “We have this really cool penalty and reward system in place to ensure that the maker always acts in good faith and sends in correct results,” says Thomas. “It’s a full-proof system and it works really well. “The maker has an escrow fee in addition to their bet, and if they send in incorrect results, they’re going to lose that additional escrow fee as a penalty. So it’s a decentralized market place in the fullest form and it allows us to stay completely out of the process.”
Thomas believes that by placing trust and responsibility in the consumer, they’ll feel greater trust toward the product in return.
ZenSports’ other signature difference from most mobile sports betting products is its use of cryptocurrency. The app has its own utility token, which Thomas says is used for nearly 100% of wagers. Cryptocurrency is a big draw for ZenSports’ customer base, split equally between Eastern Europe and sub-Saharan Africa.
“If you take for example a lot of African countries, there might be people who are unbanked or they may not have access to laptops or other devices to bet with traditional bookmakers, but they all have smartphones and they have access to cryptocurrencies,” Thomas says. “We’re perfect for them. I think we’ve got a really cool opportunity in a lot of these emerging, burgeoning markets that are about to explode in the next five to seven years.”
That explosion will inevitably be delayed by the ongoing COVID-19 crisis, which stymied a period of torrid growth for ZenSports. From July 2019, when the app launched a sports utility, through February, the company saw revenue grow from $150,000 a month to $2.5m.
“Obviously with the coronavirus issues, that’s pretty much fallen off a cliff,” Thomas admits, yet is still upbeat. “We’re optimistic the games will get going again and we’ll be able to resume our growth from where we left off of as soon as that happens.”
A fortuitously-timed round of fundraising wrapped up in February, giving ZenSports another $770,000 as the company waits out the return of sports. At five and a half members, Thomas feels that ZenSports is well sized to ride out the COVID-19 storm.
“The problem with big companies like DraftKings or FanDuel of William Hill is that in addition to having big layoffs, you probably tend to have an employee morale issue in these types of situations, even when things come back,” Thomas says. “Those folks are going to be scrambling. Maybe they’ll be short-staffed because they had layoffs. There are a lot of question marks, whereas with a smaller team like what we have, we’ve all been in this from the beginning and we’re all very closed niched.”
With only a mobile product to care for, ZenSports can get up and running as soon as sports pick up again. The return of Bundesliga will likely provide a burst of betting action from ZenSports’ soccer-obsessed Eastern European base. Meanwhile in the United States, UFC and NASCAR returned in May and Major League Baseball is in discussions for an early July return.
Whatever the timeline may be for the return of sports leagues, Thomas insists ZenSports will be in decent shape compared to some of its peers.
“Since everything is done right from their phones with our product, you don’t need to actually leave, he says. “One of the nice things about what we’re doing, because it doesn’t require a physical, land-based presence, is that once the games get going again, we’re good.”
Based in San Francisco, ZenSports is as much a technology company as a sports betting operator. Thomas possesses an attitude toward traditional sportsbooks expected from a decade-long vetern of Bay Area startups.
“I still don’t understand the physical brick-and-mortar business model and then the customer experience with having to use cash and having to get paper slips,” Thomas says. “It just feels very 1995. I know a lot of it is old legalities and certain states still require you to have a physical paper slip or still require you to register in person.”
Those same legalities have prevented ZenSports from formally entering the US sports betting landscape. ZenSports is evaluating US opportunities on a case-by-case basis, Thomas said, but it would take a special situation for the company to consider investing in a physical partnership or ownership.
For now, ZenSports is satisfied with its international customer base.
“We get people from all over the world betting on Calgary-Winnipeg NHL games,” Thomas says. “And it makes sense, because there’s enough data and media out there to easily consume this content and understand what’s going on. You don’t have to wait for your newspaper the next morning. Because of that, all these sports are really, truly global.”
The ZenSports team is staying busy by adding their own organic content including a podcast focused on the effects of the coronavirus. They also recently added debit card deposits and wire transfers to its app.
“We recognize that maybe five to 10% of the world is on crypto but growing every day, which puts us in a great position for the future,” Thomas says. “But we also don’t want to exclude those who want to use their debit card or want to use their bank account to put money in. We still want them to have a fun, easy experience for betting.”
The company’s latest venture is mixing eSports into the mix of its wager offerings. ZenSports originally planned to introduce eSports by the third quarter but hastened that process once coronavirus stopped sports leagues. The company uses Sportradar as its data provider.
“All we were doing in April was ramping up additional content to make sure that we’re not having any missing bets that we could be having,” Thomas adds. He’s betting that sports wagering will return to normal volume by early 2021, when Zensports is scheduled for a round of Series A funding.
“That’s still the plan,” Thomas says. “As long as we can get these games going again in the next few months, even really at some point by summertime, we’ll get our growth trajectory again back to the point where we’ll be attractive.”