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Waterhouse VC spotlight on Industry Leaders

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Tom Waterhouse, of Waterhouse VC discusses three leaders in the industry and their success paths.

There are notable figures in every industry and this is also true for the gambling industry.

We are highlighting three leaders of the crypto industry this month: Tim Heath is a pioneer in cryptocurrency wagering, Peter Jackson is the CEO of Flutter Entertainment, and David Walsh has been dubbed as the largest horse race gambling professional on the planet.

In the past decade, online betting has grown significantly due to the popularity of platforms that are mobile-based. Heath Jackson is at the forefront in digital innovation.

YOLO

Heath, originally from Australia is an entrepreneur in the wagering and venture capital industry. Heathmont.net was founded by Heathmont after he graduated from university.

He launched Coingaming Group in 2013, which was a cryptocurrency wagering provider and operator. In 2021, the group changed its name to Yolo Group. Yolo Group’s largest B2C betting operators are Sportsbet.io, and Bitcasino.io. In previous newsletters, we have talked about the explosive growth of Sportsbet.io and crypto betting.

Southampton FC wearing the Sportsbet.io Logo. Source: Sportsbet.io

Yolo has over 600 staff and is an established group in the wagering, venture investment and betting industries. Yolo’s B2C brand pioneered streaming integration for major sports, and they were early innovators in the “cashout feature”.

Sportsbet.io, and Bitcasino.io are amongst the fastest in the business when it comes to withdrawals.

Heath’s unwavering focus on the customer has helped Sportsbet.io become one of largest crypto betting operators in the world. Over US$2.7bn in monthly revenue is recorded by the company. In 2023, Australia’s largest operator will have around 50% of the market and an average monthly turnover of US$1.2bn.

What is next? He would reform the current international payment landscape which relies heavily on SWIFT. SWIFT, he believes, has many inefficiencies such as the lack of privacy and delays.


World dominance

Jackson has served as CEO of Flutter Entertainment, Inc. since January 2018. The company has seen its valuation double under his leadership, and is now the largest publicly traded wagering company in the world. Flutter is only surpassed by Bet365, privately owned and operated by the Coates Family.

Waterhouse VC’s portfolio includes only Flutter, the B2C B2C betting operator.

Jackson earned a degree from Cambridge in manufacturing engineering and developed his expertise during a 3-year tenure at McKinsey. After graduating from Cambridge, Jackson worked in various positions at Halifax Bank of Scotland before it was acquired by Lloyds.

He was named CEO of Travelex at the age 34. He was the CEO of Travelex for five years. During that time, he grew revenues to PS1bn and supervised its sale. After serving on Betfair’s board from 2013, he was appointed Flutter CEO in 2015.

Jackson recognized early on the value of efficiency and scale in an industry that is heavily taxed. Jackson, who has experience working in banking and consulting, developed MaxBet and Junglee Games through M&A and organic growth.


Flutter’s global brands. Source: Flutter Entertainment Plc

Flywheel Effect

Flutter divisions benefit from the “flywheel effect” by leveraging Flutter Group access to industry expertise, technology development, insights into customers and data analytics.

FanDuel’s US division, Flutter, has seen its revenue increase 11 fold from US$300m to US$3.3bn by 2022. It currently holds a 37% share of the market, a leading position in this industry.

Flutter’s flywheel. Source: Flutter Entertainment Plc

Jackson played a key role in the dual listing of Flutter at the New York Stock Exchange. (NYSE:FLUT). This company was listed in January of this year to improve access to US Capital Markets and to simplify the distribution of stock incentives for employees located in the United States.

US equity valuations have historically been higher than other equity markets around the world. Flutter shareholders will benefit from a higher valuation. The company can also use its high valuation to obtain cheaper capital.

Peter Jackson ringing the opening bell on the New York Stock Exchange. Source: Youtube

MONA

Wagering is a form of entertainment that people can enjoy, but it comes at a price. A very small number of people bet for profit – and do not have to pay anything.

Globally, we believe there are less than 50 betting syndicates that can win at a large scale. David Walsh, who is in a syndicate with Zeljko Ranagjec, is considered one of the most successful gambling players around the globe.

The syndicate wagers on global markets including horse races, sports, casinos, financial markets, and lotteries. The syndicate is reported to turn over more than $3bn each year. Some estimate their total global turnover to be much higher.

Walsh invested $75m in the Museum of Old and New Art. Walsh received the Order of Australia for outstanding contributions to the arts, and his support of cultural, charitable and sporting organisations.

Can emerging syndicates compete?

They are extremely intelligent and possess a unique set of skills. They know the dynamics behind each sport, casino game or lottery.

The models can predict “real” probabilities of outcomes based on 100s of variables. They can then put all of this together and run a betting business that relies heavily on the management of a large number people.

A team of mathematicians, statisticians and computer scientists focuses on the racing industry in order to develop, refine and maintain algorithms. These algorithms assess historical data, as well as factors that are specific to racing, such track conditions, jockey stats, sectionals and weather, to make betting decisions.

As we discussed last month racing betting syndicates also benefit from rebates for their bets, regardless of whether they win or lose. To be eligible for rebates, racing betting syndicates have to wager a large amount of money. These rebates enhance the “edge” of existing syndicates, making it more difficult for new ones to compete.

Waterhouse VC, a wholesale investor fund that specializes in betting and gaming businesses both publicly traded and privately owned around the world.

Waterhouse VC, since its inception on August 2019 has generated a total gross return of 2,858% at the end of February 2024. This assumes that all distributions are reinvested.

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