Fayetteville startup rides the wave of legalized sports betting

The U.S. Supreme Court’s decision to strike down the Professional and Amateur Sports Protection Act (PASPA) in 2018 paved the way for individual states to legalize and regulate sports betting.

Not surprisingly, 37 states and Washington, D.C., now allow sports betting, and a young company in Northwest Arkansas has positioned itself to ride the wave.

BroThrow, a startup in Fayetteville, has emerged as a popular platform for “social sports betting” since it began beta testing in late 2019.

Likened by its chief executive to the “Facebook Marketplace” of sports betting, BroThrow enables users to engage directly with friends, group mates or the broader community by proposing bets for acceptance. Unlike traditional fixed-odds or exchange-based betting, social betting means knowing who your opponent is and what everyone else is betting on.

The platform organizes and tracks all bets while seamlessly integrating with popular payment apps for easy settlement.

“We’ve built the platform for sports bettors to compete directly with each other without paying the ‘juice’ or ‘vig’ to a traditional sportsbook,” said Brady Sharp, a co-founder and CEO. “Our product is meaningfully different from what’s available in the market.”

Sharp, who left a 10-year corporate finance career in 2022 to focus exclusively on BroThrow, said the startup has raised $500,000 from investors while positioning the company for an exit. The company gained recognition earlier this year from SBC Americas, a leading gaming industry trade group, as a rising star in sports betting.

BroThrow’s users doubled in 2022 and did so again this year. Sharp launched a subscription-based revenue model earlier this year to meet the growing demand. It offers a free level and two higher tiers with additional premium features.

To date, BroThrow bettors have wagered over $100 million and come from all 50 states.

“We have a strong presence in Arkansas, though, given our roots here,” Sharp said. “This is a true Arkansas technology business designed, funded and built by locals here in Fayetteville.”

IDEA ORIGIN
Sharp, 36, grew up in Cabot and earned bachelor’s and master’s degrees in mathematics from the University of Central Arkansas. He said BroThrow’s origin dates to his undergraduate days in Conway with co-founders and early investors Chad Dickinson and Andy Winkelman, both of whom are also Northwest Arkansas businessmen.

“I didn’t really know what sports betting was, but living near a bunch of guys, I learned pretty quickly,” he joked.

He also quickly determined that betting with a bookie or through an offshore account weren’t preferable experiences from a customer perspective. Instead, he started a group text with a handful of fraternity brothers.

“We said we were going to ‘throw out bets’ to each other and do it for even money,” he said. “Because the premium you pay to place a wager through a sportsbook adds up quickly. The whole premise was betting on sports on fair terms. We will bet $100 to win $100 or $50 to win $50.”

Sharp said the group text grew from six to over 100 people. That signaled to him an appetite for “social betting,” but it was very unorganized.

“Think of a Saturday morning in college football season with 120 guys in a text message trying to bet with each other,” he explained. “There were plenty of people betting socially. I couldn’t find a good tool or platform to put some organization around it.”

IDEA EVOLUTION
Sharp moved back to Arkansas in 2012 after spending a year working in the Colorado mountains. He’s been in Fayetteville since then and earned a master’s degree in economics from the University of Arkansas in 2013.

He tinkered with the BroThrow idea for years, but it wasn’t until after the Supreme Court’s decision that he got serious about it. Because of the gambling industry’s high regulation standards, the first step was to talk with an attorney.

He explained that two legal opinions that address both relevant federal state laws support BroThrow’s business model and make the critical distinction of not being engaged in the “business” of sports betting.

BroThrow users pay each other directly through established payment apps. BroThrow is just a marketplace, like Craigslist or Facebook. Since BroThrow isn’t the house, there’s no charge for placing wagers.

“That was the biggest legal tenant for us; we had to design a way for users to pay each other directly without us getting involved,” Sharp said.

Unlike traditional sportsbooks, BroThrow doesn’t have a vested interest in the outcomes of games. The app brings in all betting lines through a third-party data feed and allows users to adjust them as they see fit.

“The market dictates price, not BroThrow,” Sharp said. “You want to bet on the Razorbacks, and they’re a seven-point underdog; if you want to ask for eight [points], you can do that.”

EXIT STRATEGIES
After starting to beta test in the fall of 2019, the COVID-19 pandemic shut down the sports world six months later, disrupting Sharp’s plans for BroThrow. With no sports to bet on, the platform’s tech developers continued fine-tuning the product.

“The fall of 2021 was our first big push into growing the platform,” Sharp said.

While BroThrow was growing, Sharp was still a finance director at Walmart, where he’d worked since 2018.

“I was burning the candle at both ends and wasn’t doing a good job with either job,” Sharp recalled. “I knew I had to choose one or the other and commit to it.”

Sharp ended the balancing act between jobs in May 2022 when he left Walmart. He is one of BroThrow’s two full-time employees. Clayton Salazar, a co-founder and head of product, is the other.

Sharp said November was BroThrow’s first cashflow-positive month, and the company continues to visit with several casino operators (including in Arkansas) to find the right partner to integrate the platform into their existing technology. He noted that consolidation M&A is also ramping up as larger companies choose to buy vs. build. Fanatics, Yahoo! and Entain have spent millions of dollars to acquire sports betting startups this year.

“Our mission has always been to build something valuable at a small scale and sell it into a larger company,” Sharp said. “We’ve got a few different exit strategies laid out in various stages of strategic dialogue, but I’d say 2024 would be a success if we find the right strategic partner.”