For sports betting I wonder how the odds are set, is DirectBet just setting them like any sportsbook? I had the idea to make a similar betting process of sending bitcoin to an address as the bet but in my idea it was a totalizer/pari-mutuel so the winners would be paid out with the losers bitcoins meaning the odds are determined purlley by the amount of bets on both sides, I explain it more
here.
I've managed to come to the conclusion that DirectBet is using some kind of API to offload user bets onto a fiat sportsbook. Most probably Bet365 or Pinnacle. They're not funding the operation themselves and they don't have their own market maker so this is the only way they can be doing it. They haven't denied it whatsoever in my messages to them though, to their credit I guess.
I don't think they convert bitcoin to fiat to match the bets. They usually accept the bets themselves, and just use odds providers as a source of displaying odds on their site. They probably pay the odds provider a monthly fee.
I have spoken to a site owner before, and even they used to us an odds provider, but provided and took the bets to their own bankroll.