Novig: Sports Betting Exchange Quadruples Valuation to $2 Billion
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Betting is now called trading, and investors are paying billions for it. The New York start-up Novig, which runs a kind of stock exchange for sports bets, is looking to quadruple its valuation within a matter of months. In a new funding round, the company is set to be valued at about $2 billion (about 1.7 billion euros), Front Office Sports reported. Only in February, Novig raised $75 million at a $500 million valuation. The new round is expected to close by winter.
Betting Against Each Other, Not the House
Novig was founded in 2021 by Jacob Fortinsky and Kechi Uk and focuses on so-called prediction markets. Unlike traditional sportsbooks, users do not bet against a house that sets the odds and takes a cut of every wager. Instead, they trade contracts on the outcome of sporting events with one another, much like on a stock exchange. Novig makes money from fees rather than a betting margin. According to the company, more than $5 billion has already been traded on the platform.
The growth spurt came over the summer: In June, Novig received approval from the U.S. Commodity Futures Trading Commission (CFTC) to operate as a regulated exchange for such contracts, one of the fastest approvals in the agency’s history, according to the company. That allows Novig to serve users 21 and older in all 50 U.S. states without needing individual state gambling licenses. Its investors include the crypto fund Pantera Capital, Forerunner Ventures and football legend Joe Montana. A recent ad campaign featuring actress Sydney Sweeney also drew attention.
Kalshi and Polymarket Play in a Different League
Despite quadrupling its valuation, Novig is still a small player. Market leader Kalshi is valued at about $40 billion, Polymarket at about $21 billion. Both have recently turned over billions, mainly on sports: On the World Cup final alone, bets on the two platforms totaled more than $5.7 billion. The marketing shows how much money is in the market, too. Polymarket is paying basketball star LeBron James $15 million a year as a brand ambassador, more than three times his current NBA salary, according to Front Office Sports.
Regulators See Illegal Gambling
The boom is also drawing the attention of regulators. New York State recently sued Polymarket for at least $4.6 billion and is seeking as much as $36 billion from Kalshi. The accusation: The platforms are running unlicensed gambling under the cover of federal oversight. Polymarket is fighting back and has filed a countersuit. Resistance is also growing in Europe: Spain has provisionally blocked Kalshi and Polymarket, and the EU securities regulator ESMA has warned that such contracts could fall under the ban on binary options. For Novig, which focuses entirely on the U.S. sports market, the crucial question is whether its federal approval will protect it from state lawsuits in the long run.
