The news came in a LinkedIn posting from Patrick Jay, previously hired by theScore to head up its sports trading division and now apparently changed with the same gig for Penn National.
Jay said the company was looking to build “the best North American Sports Betting Risk and Trading Team in the business” from a “new hub” in Gibraltar.
He added that the successful candidates “will know in their DNA’ that the role is about more than just “old-school risk management” but would be about “taking risk management on the full 360 of the Sportsbook future – product, promotions, presentation, as well as pricing and liability management.
“If you are the Trader 2.0 of the future who wants to put the fan and the fan experience at the center of Sportsbook Risk and Trading Operations, please DM me for 2022 take off,” Jay signed off.
Offshore 2.0
The posting was immediately seized upon by commentators on Twitter as being something of a retrograde step. One poster, Henrik Invest, asked “what happened to U.S traders and boots on the ground argument DK and Penn have brought up before as the main argument for insourcing?”
Another poster was more scathing: “I’ve worked in Gibraltar. I can tell you they know next to nothing there about any sports we specialize in here in the USA,” said Rex Beyers.
What’s the story?
When Penn National stumped up $2bn to buy Score Media & Gaming in the summer last year, CEO Jay Snowden made much of the “in-house managed risk and trading services platform” that theScore was building “specifically for the North American market”.
While he didn’t specifically suggest that component would necessarily be in North America, he did talk about putting together a state-of-the-art tech stack “built for the North American market.”
When it comes to trading built-for does not necessarily mean built-in though analysts could be forgiven for thinking they meant the same thing.
Others have made the connection more explicit. During a recent presentation at a conference hosted by Jefferies, the US CEO at PointsBet Johnny Aitken said that not only was the company not ceding that to a third-party such as Kambi” but also that “our trading team is based in the US on US hours”.
“That is also unique versus how most of our competitors are set up.”
As was discussed previously, this was a questionable claim. But the sentiment holds that most of Penn National’s competitors have gone the route of putting together local trading teams.
This includes, ironically, the current supplier of Penn’s Barstool business Kambi which runs a trading team out of Philadelphia.
The impact of being offshore
The wider question is whether this matters. For that, we likely need to delve deeper into why Penn would choose Gibraltar as a trading hub.
Jay’s recent background is instructive. After stints at Ladbrokes and the Hong Kong Jockey Club, he was previously CEO at failed UK-facing challenger brand MoPlay which was based in Gibraltar. His LinkedIn profile says he is still based there.
He joined theScore, pre-Penn acquisition, in July last year and according to Benjie Levy, COO at theScore, he was the “ideal candidate” to lead the migration of risk and trading in-house.
A European home
And what about Gibraltar? It has long been the home of many European-facing operators. But its original appeal as an essentially tax-free haven from which to conduct point of supply offshore and grey operations has long since waned.
Overtaken by the development of point of consumption regimes across Europe, its appeal now is more nebulous. A hub, yes, but a diminished one and with a shrinking talent pool. Hence, presumably, the social media call-out for ‘trader 2.0’ characters to fill the breach.
Could these positions have been fulfilled in the US and Canada? Of that, the answer is an unequivocal yes. The U.S. is now a self-sustaining sports-betting market with efforts being made across the sector to build the technology to drive the market forward and a growing talent pool.
It is not fanciful that in the next few years, developments in U.S sports betting will transform the global sector. At the very least, it will be attracting the levels of investment sure to attract the top talent.
In this light, the decision to base a trading hub at a location outside of the US is in danger of looking somewhat short-sighted.
Talk about risk management.
