The betting industry has become known for its unfair practices. Earlier this year, online gambling companies in the UK faced a regulatory investigation into such issues, including the cancellation of winning bets and the difficult conditions around receiving payouts. However, one individual is beginning to transform the industry through innovation.
Jason Trost, founder and CEO of London-based betting exchange Smarkets won Innovation Entreperneur of the Year at the Great British Entrepreneur Awards this year. Unlike other players in the field, Smarkets consider themselves a fintech company, not an entertainment or gambling business.
Jason says: “We are tackling the age-old gambling industry with our roots in financial technology, focusing on giving our customers the lowest commission on net profits (2%) and therefore the best odds of any exchange or bookmaker.
“The betting industry is extremely inefficient and unfair to customers; I want to disrupt the sector by having significantly lower margins than our competitors. Internally, I have implemented pioneering self-management principles that empower our staff to make their own decisions and shape the future of not only this company, but the wider betting industry.”
Jason’s fascination with event markets began whilst studying computer science at Northwestern University in Chicago, when the US presidential election between George Bush and John Kerry was happening.
He said: “The aggregated wisdom of the crowd gave an implied probability between 0-100% of either man winning the race, so it was easier to gauge the latest by checking that market than pouring through countless articles or being glued to the news.”
After university, Jason became a trader for Great Point Capital but felt caged by the menial jobs he was tasked with. His friend in London introduced him to sports betting and its inefficiencies, and Jason decided to take the plunge and move across the pond to found Smarkets in 2008.
Since then, the company has seen phenomenal growth to become one of the fastest-growing companies per employee in Europe. Launching from a two-person flat, the company has evolved to a 68-person business, operating from a modern office in upmarket St Katharine Docks.
The year ending December 31, 2015 was transformational for the company, as operating profit grew by 1,569% to £5.2 million and turnover increased by 429% to £10.4 million. Despite this impressive growth, Smarkets still only have around 1% of the market, so there is plenty of scope for increased share.
Jason says the vast growth of the company is down to a team motivated by a desire to solve problems and work as part of a driven neural network. Part of their innovation is questioning century-long management practices which are out of date.
He said: “At Smarkets, trust is the driving force. We are revolutionising the way companies work in Europe by being one of the first to advocate and implement a self-management culture. We believe humans work better, are more motivated and more efficient when given the freedom to thrive as part of a functioning neural network. We trust employees with all financial information. We trust employees to take time off as appropriate. And very importantly, we trust employees to set their own salaries.
“Betting is a financial commodity, so we are led by innovation and our desire to make the best product, rather than as much money as possible.”