Waterhouse VC Crypto betting

Steve Jobs: “Innovation means the ability to view change as an oportunity, and not a danger.”

In the past, betting industry leaders have been leading innovation in several fields including marketing, payments and user experience. Sportsbet.io, Stake.com and other online crypto operators with a UX similar to those of FanDuel or DraftKings are already generating extraordinary profits and leading the way in marketing and payment innovation.

Sportsbet.io reported US$2.7bn per month (PS2.12bn/EUR2.51bn), and it is likely that this number has increased. In 2023, Australia’s biggest operator had an average of US$1bn in monthly turnover and a 45% share of the market.

Influencer Marketing

The streaming market is dominated by Stake, and large crypto betting operators like Drake. Shuffle.com, a new operator that focuses on identifying influencers who have loyal followings between 1,000 and 10,000 fans instead of partnering up with celebrities to stream.

The micro-influencers can be cost-effective, as they are undervalued by existing betting operators.

Fans who are dedicated do more than just “like” influencers’ posts and watch a 30 minute betting stream. They communicate with influencers directly in chat groups, and they do so around the clock. Influencers with 10,000 “dedicated” fans could produce more revenue per dollar than influencers with 100,000 followers.

Shuffling

Shuffle, a new cryptocurrency wagering business, will be launched in 2023. It is at the forefront for marketing, customer retention, and payment innovation. It has grown rapidly and has already processed more than US$6bn worth of bets.

The Shuffle management team is led by Noah Dummett and draws upon expertise gained in marketing roles, rather than experience from the traditional betting industry.

Noah is a native Australian of 24 years old who has worked at Bitmex, one of the most rapidly growing crypto exchanges. He thinks crypto betting operators could be as big and as profitable as exchanges where he previously worked.

Noah is confident that Shuffle will become the largest cryptocurrency wagering company in the world. To achieve this, he believes it takes a team of young people who are energetic and focused on their goals. Shuffle currently has 55 employees with an average of 24. They plan to double that number in 18 months.

Ishan haque understands the importance of community building and influencer marketing, and he uses live streaming, crypto groups, and betting group chats to reach out.

Hollywood!

Similarly to dominant operators like Stake, Shuffle intends to announce large-scale brand ambassadors and endorsements later this year with Tier 1 sport teams and mainstream celebrities/athletes. Smaller operators must first pursue advertising deals that offer a high return.

After a successful small deal, larger marketing deals can be considered. Key metrics are measured the same for smaller and bigger deals:

• What percentage of eyeballs are converted to signups?
• What percentage of signups result in first deposits?
• Can depositing players retain their money for a long time?

The metrics can be used to re-engineer expectations of larger transactions, which tend to be more challenging to value.

How to retain customers

After an operator selects influencers with whom to work, it can be difficult to keep the relationship going after an initial campaign. This results in an increase in signups, followed by an inactive period. There are many ways to increase customer retention. These include personalised promotions, engagement with the community, and continuing promotional campaigns that last the duration of an influencer’s partnership.

Haque credits Shuffle’s success in the early days to its ability to iterate quickly and act on feedback. Even the most effective marketing strategies and retention techniques are useless if the product does not engage.

Shuffle’s platform has a custom-built user interface and games developed in-house that prioritize speed and the experience of users. Shuffle, for example, has created tools such as “Advanced Dice”, which allows users to seamlessly switch from games like NBA parlays, plinko and blackjack without lag.

Shuffle’s Casino Games also boasts some of the best return-to-player rates in the business, including house games with a RTP of 99%, and slot machines at 97%.

Waterhouse VC believes that a complete suite of high-quality wagering products are essential to our success. We invest in B2B providers rather than operators because of this. B2B providers are essential for operators in a competitive market to distinguish themselves through their product offering and the user experience.

Where to begin?

The best way for emerging betting businesses to succeed (both B2C and B2B) is by focusing on a specific niche. Shuffle focused its early growth efforts on Japan because it was a market underserved at the time by cryptocurrency wagering operators.

Understanding the complexity of culture, localisation and marketing channels is essential to regional marketing.

New operators can instead focus on a single market, by employing native speakers, providing localised support and aligning their brand with local culture. They also need to understand what type of content the locals are interested in. This growth strategy can be particularly useful for markets that are newly regulated, such as Brazil.

Shuffle, Stake, and Sportsbet.io are examples of companies that have demonstrated how a differentiating product, marketing strategy, and user-experience can drive rapid revenue growth within the fiercely competitive betting industry.

Ausbiz recently featured my recent discussion on the US Competitive Landscape. In my recent Ausbiz article, I discussed the competitive landscape in the US.

Wholesale investors who are interested in the latest news about gaming and wagering industry trends can follow us on Twitter @waterhousevc or via our website WaterhouseVC.com.