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After 2½ years of building its product in stealth mode, California-based EDGE Markets is readying the launch of EDGE Boost, a virtual debit card with which sports bettors can get interest-free loans to fund their mobile sportsbook accounts.
Even before its launch, however, the nascent company is coming under scrutiny from operators, regulators, and advocates for problem gambling.
As of a week ago, EDGE Boost’s homepage featured 18 “compatible bookmakers,” a group that included virtually every active U.S. sportsbook. On June 1, however, FanDuel’s logo — along with those of the 17 other operators — was removed from EDGE Boost’s website after a FanDuel spokesperson told Sports Handle it would be “investigating the improper use of our logo on their website.”
Sports Handle contacted a half-dozen sportsbooks to get their thoughts on EDGE Boost. None of them had heard of the product, and their collective sentiment was best captured by Fanatics Sportsbook Vice President of Communications Kevin Hennessy, who said, “We did not like the way the company was using our logo on their website without our permission and making it appear that we are partners. To be clear, the Fanatics Sportsbook is not a partner and has no plans to partner with this company.”
EDGE Boost, which includes funding from Bullpen Capital, an early backer of FanDuel, plans to launch what EDGE Markets founder and CEO Seni Thomas calls its “bet-now-pay-later” virtual debit cards by NFL season.
While EDGE Boost is a dues-paying member of the National Council on Problem Gambling (NCPG) and has proactively incorporated some helpful responsible gambling tools (BetBlocker among them), at least one prominent PG/RG professional thinks the product is, at its core, “the antithesis of responsible gambling.”
“Gambling should only ever be engaged in with money that an individual has and can afford to lose,” said Brianne Doura-Schawohl, a problem and responsible gambling consultant. “For a business that desires to ‘help make gambling hassle-free,’ this has the makings of creating more harm and nuisance than good.”
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How EDGE Boost works
After someone is approved for EDGE Boost’s virtual debit card, they must first transfer their own money from a linked bank account before receiving a matching loan up to the amount they just deposited. The customer can then link their card to a sportsbook account and begin wagering, while paying the interest-free loan back in four weekly installments, with no late fees.
So how does EDGE Boost make money?
“We make 2 percent per transaction on the transaction fees that VISA pays us,” Thomas explained. “If the user puts in $100 and we put in $100, we’re actually making 4 percent on our money.”
In order to make money off those transaction fees — or to issue its cards in the first place — EDGE Boost will first have to establish an actual partnership with VISA or one of its competitors. After a source familiar with EDGE Boost’s plans informed Sports Handle that VISA had not entered into any partnership with the company and that it could not issue virtual VISA debit cards until it did, Thomas confirmed that EDGE Boost’s debit card application had yet to be approved. He then produced documentation showing that EDGE Markets was a participant in VISA’s Fintech Fast Track program.
On Tuesday night, language stating that EDGE Boost was being presented “in partnership with VISA” was removed from EDGE Boost’s homepage, along with VISA’s logo.
‘No relationship at all’
If an EDGE Boost bettor wants to pay off their loan early — in one lump sum, say, versus the prescribed quartet of installments — they would incur an early repayment fee of 10 to 20%, which, in turn, would earn them access to a higher level of matching funds.
The fact that EDGE Boost’s funds will be carried on a debit card instead of a credit card is a crucial detail. Some sportsbooks, most notably Betr, don’t allow for the funding of betting accounts via credit card, while several states expressly prohibit such sports wagering transactions.
In 2021, EDGE Boost commissioned Ifrah Law to assess whether its business model was constructed in such a way that it would fall outside the purview of the New Jersey Division of Gaming Enforcement (DGE).
In reaching their conclusion, Ifrah’s attorneys wrote, “Our firm consulted with an assistant attorney general at the DGE, who advised our firm that if the business at issue does not have any contractual agreement with any sportsbook operators, then there is no need for any level of licensing through the DGE. Thus, based on this advice alone, we believe it is reasonable to conclude that EDGE is not subject to the DGE’s licensing requirements because it does not contract directly with any sportsbooks.
“It is our belief that EDGE’s product is not subject to vendor registration requirements set forth by the New Jersey Division of Gaming Enforcement.”
Added Thomas, “We’re not a payment processor. We don’t have any contracts with the sportsbooks. We have no relationship at all.”
When asked what would happen if someone failed to pay back a loan more than 30 days after the final installment was due, Thomas replied, “We always hold at least one week’s payment as collateral.” He compared it to when a hotel puts a hold on your credit card at check-in to cover any ancillary purchases or damage to the room.
‘The antithesis of responsible gambling’
Unlike the sportsbook and VISA logos that have been removed from EDGE Boost’s homepage over the past week, that of the NCPG remains prominently — and legitimately — displayed.
Indeed, NCPG Executive Director Keith Whyte confirmed that EDGE Boost is a dues-paying member of the NCPG. But he’s careful to note that “anybody can become a member,” adding, “We encourage all stakeholders in the gambling industry to become a member. It’s not a vetted process. Having our seal on your site means you’re a member of the national council. You’re committed to paying dues and supporting our work. It doesn’t mean we’ve endorsed or approve of any products or services you may provide.”
In assessing EDGE Boost’s offering, Whyte said, “Borrowing money to gamble is always an additional risk for people with gambling problems, but in the U.S. we’ve got a long tradition of in-house casino credit, gambling on credit cards. Many operators, in one way or another, are encouraging people to utilize these higher-risk credit methods.
“I do give [EDGE Boost] credit for reaching out to us prior to launch and building in some RG controls. I’m not saying membership makes everything right, but at least they came to us before launch.”
Doura-Schawohl, who counts the NCPG among her clients, takes a less charitable view.
“In my opinion, this ‘alternative payday loan’ or ‘alternative credit card’ is the antithesis of responsible gambling,” she said in an email. “This platform glorifies and entices people to spend more than they can afford to lose. Their ‘how-to video’ is aggressive and so overt it reads almost like a playbook or checklist of examples from the problem gambling/gambling addiction definition found in the DSM-V (Diagnostic and Statistical Model of Mental Disorders).”
The bigger regulatory question
EDGE Boost has plans to launch in Iowa, where Racing and Gaming Commission Administrator Brian Ohorilko said the product “might be OK” if it were squared against the state’s gambling regulations.
“I would say it would depend on the controls available to ensure that credit cards are not being used to fund this prepaid VISA card,” said Ohorilko. “In Iowa, the funding with any form of credit is strictly prohibited. We currently look at one funding source back when determining compliance. For example, any direct funding source of a sports account must ensure that credit is not used to fund that source.”
On the subject of regulation, an industry insider who spoke with Sports Handle on condition of anonymity said, “The regulatory question on this is going to be interesting. I agree with Ifrah’s assessment to the extent that we don’t require MasterCard or Wells Fargo to register as a payment processor, but the caveat to that is [the EDGE Boost debit card] is specifically designed for gaming. The bigger regulatory question, rather than licensing, is who doesn’t allow credit, and there are a few states that do not.”
Just because EDGE Boost is operating on the premise that it is not subject to state gambling regulations doesn’t make that a non-issue with various stakeholders. As a second insider who asked not to be named said, “For the legal sports betting market to grow, it’s important that any company that wants to work in the space is vetted and approved by state regulators. For [EDGE Boost] to circumvent the process is cause for concern. If they don’t plan on getting approved by state regulators, legal sportsbooks won’t be working with them.”
Additional reporting by Jill R. Dorson
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