To comply with state laws, online sports betting providers must verify that customers are physically located in a legal sports betting territory. GeoComply has been the market leader in this type of geolocation service for over a decade and growing significantly in that time, owing to the state-by-state adoption of mobile wagering — and GeoComply's geolocation patent.
However, some newcomers are trying to challenge GeoComply's market dominance — including one that it contends is using its patented geolocation methodology.
On September 27, GeoComply filed a lawsuit in Delaware District Court, alleging XPoint is infringing on its patent. GeoComply subsequently petitioned the court for an expedited discovery schedule, which would enable GeoComply to examine XPoint's software (and potentially solidify its case), and while the court rejected that request, it only delayed the inevitable — once the case moves forward, per GeoComply, an independent third party (in a controlled environment and with XPoint's legal team present) will review the source code and then report on any confirmed infringement.
"This action is about protecting GeoComply’s proprietary technology. We welcome healthy competition and new ideas in the marketplace and the ability to distinguish our leading solutions and technology from others," said GeoComply in a statement. "We also respect, and expect others to respect, the valuable intellectual property that companies like ours spend a lot of time, effort and money developing. We are confident in the merits of our case."
GeoComply uses a unique technique to pinpoint the location of a sports betting customer. Its software collects location data from multiple sources, including a client’s device as well as other devices within the vicinity, and also utilizes data from other programs installed on a client’s device. GeoComply filed its geolocation patent in 2012. Patent No. 9413805 was officially assigned in August 2016.
More than 400 million devices use GeoComply’s software to enable online sports betting. GeoComply’s solutions are currently used by leading operators such as DraftKings, FanDuel, and BetMGM.
XPoint has called the suit "meritless" and will not comment further on the case. But the infringement claim is not trivial and comes at a critical time for XPoint.
XPoint’s big 2022 push
Founded in 2019, XPoint is just now gaining traction.
In August, PlayStar's online casino launched in New Jersey, using XPoint’s geolocation technology. In September, Sporttrade, a sports betting exchange, made its US debut using XPoint’s service.
XPoint recently announced partnerships with both BettorFantasy and Flex Fantasy, Daily Fantasy Sports (DFS) operators, utilizing the company’s XPoint Lite, which is specifically designed for DFS clients.
In late September, XPoint announced a successful new funding round. Its latest investors included Acies Investments, the Raine Group, and SuRo Capital Sports. The firm’s original investors — Bettor Capital and Courtside Ventures — upped their XPoint stakes during the latest round.
Bettor Capital Managing Partner David VanEgmond was granted a seat on XPoint’s Board of Directors. VanEgmond formerly held executive positions with Barstool Sports and FanDuel — VanEgmond was instrumental in PENN Entertainment’s acquisition of Barstool Sportsbook and facilitated FanDuel’s acquisition by Flutter Entertainment.
Perhaps XPoint’s most meaningful announcement, however, came just after GeoComply’s lawsuit. On Friday, XPoint announced it had been accepted as a board-level member of the American Gaming Association (AGA). XPoint’s CEO Marvin Sanderson will serve on the AGA’s Board of Directors.
So, while GeoComply may currently be the Goliath in the geolocation realm, XPoint has lined up industry funding and alliances to give them a fighting chance.
But that could all change with the outcome of GeoComply’s lawsuit.
