Mission Impossible? PropMe Wants To Change The WV Online Sports Betting Market

Posted on August 10, 2020 - Last Updated on August 27, 2020

Currently, the scope of legal online sports betting in West Virginia amounts to whatever the three licensed sports betting apps in the state offer. The PropMe sports betting app wants to innovate that space, but it needs some help to make that happen.

PropMe is a mobile sportsbook concept that focuses on prop bets and a strong social component. In order to realize their goals, however, they need the WV Legislature to do some tweaking.

What is PropMe and how would it change sports betting in WV?

David Ealy, a WV entrepreneur and the company’s co-founder, explains why he believes the online gambling products his company will offer are unique.

“In 2016, a bunch of us were sitting around a college baseball playoff game. We were trying to bet each other pitch by pitch and we couldn’t. We couldn’t find an app for that. So we started the [company], just trying to solve a very simple problem… we call it the peer-to-peer marketplace, PropMe. That’s what the company name was based on.”

Perhaps the most unique aspect of the platform could be the number and variety of prop bets available, however.

“We consider ourselves kind of prop pros,” Ealy elaborated. “This has been out on Apple and Play Store for a long time. We just don’t have … the payment mechanisms — the registration in, or the payout. That’s why the Apple and Play Stores let us have our app there. So it’s had a two year run now, and man, it is so exciting because we do cheeky props.”

Another unusual feature of the brand allows WV businesses like bars and restaurants to partner with PropMe. Ealy said it is a simple cross-promotional deal.

“Our mobile platform has a unique feature that gives bars and restaurants a spot on our menu that allows for them to promote our contests and prop bets. This doesn’t involve putting anything into a bar or restaurant. These activities are already governed by the WV Lottery.”

The unique nature of the platform has garnered attention from prominent figures in the state. That hasn’t led to the ultimate success yet, however.

Regulatory setbacks in taking PropMe to its zenith

In trying to get its product to market, PropMe ran into some regulatory hurdles. The company was able to secure the aid of a powerful ally in Charleston, however.

Obviously, WV law allows for online wagering. That must happen under the auspice of a facility partner with a master license, however. That’s how BetMGM, DraftKings and FanDuel legally accept online bets in the state.

WV law caps the number of master licenses and skins that each master licensee can issue. The cap on master licenses is five and they are allocated to the five WV casinos. Each one can operate up to three skins, for a total of 15 skins statewide.

A new WV sportsbook wanting to claim one of those skins also has to secure their own management services provider license from the WV Lottery. Trying to secure a skin with a facility partner and a license put the company in a trap of circular logic, according to Ealy.

“The flaw in that process is we can’t get commercial contracts with a bank, a payment gateway, or an ACH or credit card provider to get a license because we don’t have a skin,” Ealy stated. “We can’t get a skin until we have one of those four things satisfied. So we’re stuck in a loop.  The lottery says to us, go get a skin. I can’t get a skin until we have a license. So we’re stuck in a loop.”

A possible exit from the circular logic is adjusting the state’s gambling laws to “untether” online sports betting from the state’s brick-and-mortar gambling facilities. That’s what WV Delegate Shawn Fluharty, one of the biggest proponents of the last round of gambling expansion, tried to do earlier this year.

Fluharty supports a new WV sports betting option

In the past legislative session, Fluharty tried to get support for a bill that would have allowed bars and restaurants in WV to obtain the same management services provider licenses that BetMGM, DraftKings and FanDuel have. That was unsuccessful, however.

“The bill was set to hit the Judiciary Committee agenda last session,” Fluharty explained.

“What happens in every state legislature with virtually every ‘gambling’ bill is a lot of interested parties became more interested when the bill was getting attention. The clock struck midnight on session before we could get real traction on the bill, but it certainly started getting discussion which is half the battle. When I first pursued sports betting and iGaming legislation in West Virginia, they didn’t pass the first go-round.”

Fluharty is optimistic about enacting similar legislation in the next session. That could have a better chance with some tweaks to the approach.

“We’re definitely working hard at how to attack the legislative piece,” Ealy said. “For example, during our first attempt, we said we didn’t want to include sportsbook operations. That’s in now. We will be offering a full mobile gaming portfolio that will include games and user experiences that aren’t currently on the market. I’m actually glad we had that set back because we’ll end up stronger with a better offering for WV.”

For as many setbacks as the company has had, it has secured one major victory. WV gaming executive and prominent WV businessman Ted Arneault joined the fray.

Arneault’s investment ups the ante for PropMe in WV

In the middle of July, Arneault invested in PropMe for a percentage of the business. He provides the company with much more than just cash, however.

Arneault’s value may be much greater in his connections. For example, he has been able to secure hundreds of millions of dollars in funding for his own gambling ventures in the past, ostensibly solving PropMe’s issues with banking services in WV. Ealy explained what Arneault brings to the table.

“I think with Ted on the team, this tells anyone seeking to provide us with a license that we have access to funding and proven leadership. This lowers our risk profile. And, Ted has a vast network of lobbyists and experience with moving legislation.”

So after a good deal of initial frustration, it looks like the pieces might be coming together for a legislative push this fall that would allow for untethered licensing. There are other power players in the WV gambling picture that haven’t acted on this issue yet, however.

A final possible ‘gatekeeper’ to consider moving forward

Fluharty spoke about one of the other significant interests in any gambling expansion. Like Arneault, this group has its own lobbying resources.

“Casinos have invested heavily in West Virginia and have been operating successfully,” Fluharty commented. “We weren’t going to simply run over them with the passage of sports betting and iGaming. We understood the importance of allowing a model that has worked in West Virginia to continue. They were best suited to perform in this new arena.”

If the legislature changes the law to allow the lottery to grant licenses for online wagering without a casino skin, that greatly reduces the value of those skins for WV casinos. Additionally, BetMGM, DraftKings and FanDuel might look to exit their existing deals.

For that reason, casinos might use their lobbying arms to oppose this change. Swaying legislators his way might be a matter of convincing colleagues that the sports betting landscape in WV has to adapt to stay relevant.

“As new opportunities arise and the market becomes more competitive as we’re seeing now, I think we have a duty to look at all options and evolve,” Fluharty continued.

“If only three of 15 licenses are being used, and there is a market and interest for more, we certainly do not want to have a barrier to entry.”

Lawmakers in Charleston will determine the fate of PropMe in WV this fall. If Ealy and Fluharty get their way, some of the most innovative prop betting markets in the nation could be found in the Mountain State.

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Derek Helling

Derek Helling is a freelance journalist who resides in Kansas City, Mo. He is a 2013 graduate of the University of Iowa and covers the intersections of sports with business and the law.

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