The New Orleans Saints were on a roll to start the 2013 NFL season. The team was 7-1 after only losing to the New England Patriots by a field goal.
This left Luke Pergande in a quandary. While working for Bloomberg in San Francisco, he’d visited Las Vegas over Labor Day and bet $100 on the Saints to win the Super Bowl at odds of 50-1.
The Saints’ odds had dropped to 15-1 by November.
Hoping to secure some winnings on a ticket that may eventually be worthless, he called a friend.
“Where can I sell this ticket?” Pergande asked his friend, Ian Epstein. The two met at the University of Arizona.
“Nowhere,” said Epstein, who worked for Arizona’s largest sportsbook CG Technology.
Both began discussing the possibility of reselling betting tickets and even creating a marketplace for bettors to buy and sell — kind of an eBay or Craigslist for sports wagers.
Pergande and Epstein were soon contacting lawyers; 14 out of 15 told them their idea wouldn’t work.
The 15th, however, believed their idea was legal and could succeed.
The duo began working on a plan and found a developer to build a prototype.
Once the gaming commission approved the concept, Pergande and Epstein left their jobs and headed to Las Vegas — and PropSwap was born.
Betting and bargains
Listing a bet or purchasing someone else’s on PropSwap is simple. A new user creates an account and then has access to list or buy tickets.
The company has processes in place to make sure a buyer receives his or her ticket and a seller receives payment. PropSwap even offers resources to help sellers determine the fair market value.
For example, a bettor may have placed a $100 wager on the Kansas City Chiefs to win the Super Bowl at 40-1 before the season and now the odds are around 4-1. The Chiefs have had a huge season, but winning a Super Bowl is definitely not assured. The bettor can offer that ticket for sale and still bank some cash no matter the turnout.
“You can make your money today off a great pick you made back in August,” Pergande said.
“Without us, you’d have to wait until February to get paid and only if they win. We all know New Orleans or New England may have something to say about that. And what if, God forbid, Patrick Mahomes gets injured? It’s sports; injuries happen all the time.”
Average tickets sell for about 10 times what a bettor paid. That $100 bet turns into about $1,000 — not a bad payday for a Super Bowl payout that isn’t a certainty. Betting slips are kept locally after a sale.
The service benefits buyers because they can get better odds on a wager than they could currently get at a casino. The service collects a 10 percent fee on sale prices.
A quick look at the PropSwap marketplace provides a glimpse of numerous bets listed for sale from several sports.
A prop bet on Patrick Mahomes to lead the NFL in passing yards would pay out $2,550, but is available for only $1,111.
Looking to bet on Kansas Jayhawks to win the NCAA Men’s Basketball Championship? A chance to win $500 is available for $60, odds of a bit over 7-1.
With the recent legalization of sports betting in NJ and other states, Pergande and Epstein have a business that seems to be in a position to grow.
After building the business for three years in Las Vegas, Pergande has moved to New Jersey while his partner manages operations in Nevada.
“This concept is great for the casinos because their customers now have an insurance policy for their bets,” Pergande said.
“Customers can sell bets for a loss, too. We’ve seen guys sell their Eagles Super Bowl Bowl bets already this year who don’t have a good feeling they’ll repeat.”
Pergande offers a few success stories.
The Vegas Golden Knights were the talk of the hockey world last season, and one bettor wagered $300 on the Knights at 100-1 to win the Stanley Cup — an opportunity for a payout of $30,000. He sold it for $12,600 before Game 1. The Knights ultimately lost to the Washington Capitals and that bet would have paid nothing.
One bettor placed a wager on the Bills to win less than 6.5 games. Buffalo was 4-8 and would need to finish 3-1 for the bet to be a loser (probably not going to happen). Even so, the ticket owner needed some Christmas money and listed the ticket for $1,650 even though it would actually pay out $1,833. The logic?
“The buyer is happy to pay the $1,650 today, to collect in January once the regular season ends,” Pergande said. “He is going to make an 11 percent return in two months.”
So far, buyers have been easier to attract than sellers but that might change with more legalized sports betting.
The company has found two issues that deter bettors from listing a ticket for sale. One of those Pergande termed an “endowment effect,” where players just don’t like selling what they own, believing their possessions have a greater value than what they’re actually worth.
Another issue is a “regret avoidance effect,” where no one wants to be the one who sold a winning ticket.
An additional challenge is awareness and PropSwap is hoping to change that.
“Many people don’t realize that once they make a bet,” Pergande said, “they can immediately list it for sale using our app.”
Don’t want to wait on that $100 Chiefs wager at 10-1? With odds now in the 4-1 ballpark, it might be time to cash in for a few hundred bucks.