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Raising the Stakes

The Financial Times turned its attention to crypto darling Stake.com this week, to examine how the brand has grown “almost unnoticed” to become the world’s seventh largest gambling group in the space of just six years.

Featuring commentary from co-founder Ed Craven, the youngest billionaire in Australia, the publication explored the ups and downs of Stake’s meteoric rise in recent years.

Craven, alongside business partner Bijan Tehrani, set up the brand after being banned from online role playing game RuneScape for inviting players to bet with digital gold coins, effectively creating an in-game gambling operation.

The pair’s business ventures to date have been bankrolled by early investments in cryptocurrency, at a time when Bitcoin sold for less than $20 a piece.

According to estimates compiled by Regulus Partners for the FT, Stake’s revenue eclipses that of industry stalwarts like DraftKings and 888, with the firm generating more than $2.5bn in revenue in 2022.

That leaves just a handful of operators – including Flutter, Entain, 1xBet and bet365, ahead of the crypto-focused firm, which is popular among high rollers, not least big-betting celebrity partner and Canadian rapper Drake.

One former employee, who was working with Stake in its early days, told the FT: “There were so many high rollers. I’d be sitting there with the team and one of them would be like: this woman in Singapore has just put her hand down for a million dollars against this guy in Russia who’s done the same.”

The piece sets out how Craven and Tehrani have steadily built up Stake’s reputation to the point where users are comfortable making such bets, through a combination of brand-building, sports sponsorship and advertising.

Those tactics are perhaps secondary, however, to Stake’s core business plan, which, according to FanDuel founder Nigel Eccles, has become a proven model. “You start in the grey market and you grow to a huge size, and then you find a path to becoming more regulated.”

Indeed, Stake boasts six million accounts and 600,000 users across a variety of grey markets including Brazil, Japan and Southeast Asia.

Can Stake eventually become the world’s biggest operator? Following the breakneck speed of its ascent in recent years, that might not be impossible.

The drugs don’t work

A curious story from the world of medicine came out via The Guardian this week, as the paper shone a light on an unusual side-effect of the antipsychotic medication aripiprazole.

According to an expert in the field, patients who are prescribed the medicine – which is commonly used to treat depression, bipolar disorder, psychosis and schizophrenia – must be told there is a risk it could lead to them developing a gambling addiction.

The National Problem Gambling Clinic – a treatment provider for those experiencing gambling-related harm in England – has observed a growing number of patients who have developed gambling addictions following aripiprazole use, with some patients losing huge sums of money and having relationships break down as a result.

Professor Henrietta Bowden-Jones, the psychiatrist who runs the clinic, said more awareness was needed around the issue as GPs are failing to monitor whether patients using the drug are developing addictions as a result.

“This is not just any side-effect – it can come with a risk of losing your own home. What we constantly see is that not enough people know about this. I gave a recent lecture to all the psychiatrists in my trust and a very large proportion had never heard about it,” she said. 

Nearly 9% of the National Problem Gambling Clinic’s patients in 2022 were found to be on the drug, with most saying they were not aware of the connection between its use and gambling addiction.

Lee Jordan, a patient who began using aripiprazole in 2021, went from gambling small amounts occasionally for fun to experiencing a gambling habit which quickly began to take over his life.

“I was spending a huge amount of money because it was a release. But the devastating effects were humungous – I nearly lost my relationship, I lost family, friends, it just destroyed my life really,” he said, adding that he had lost £10,000 to gambling companies and been unable to recoup the money.

After stopping using the drug in 2022, Jordan was able to give up on gambling – through a combination of willpower, self-exclusion software and the removal of the extra pressure created through taking aripiprazole.

The story shines a light on under-explored links between mental health, psychiatric medicines and problem gambling, a topic which is slowly beginning to gain more awareness in the medical world.

Holknekt goes for the jugular

Swedish fashion designer and entrepreneur Per Holknekt pulled no punches this week in a guest column he wrote for Swedish news portal Realtid.

Holknekt, a self-professed gambling addict, is currently in the process of suing Unibet owner Kindred Group for damages worth SEK10m (€887,000), after losing SEK26m with the betting brand during a 15-year struggle with gambling addiction. The operator, he argues, exploited his addiction for profit.

In his latest column, Holknekt went for the industry with all guns blazing, after Betsson AB CEO Pontus Lindwall appeared in court recently to defend his company against a similar case being brought against it by another former gambling addict.

Lindwall’s plea of ignorance around Betsson’s methods of identifying problem gambling behaviours did not sit well with Holknekt, who pointed to a press release issued by the CEO in 2017, claiming Betsson “had developed safe and strong tools to find gambling addicts both in personal and data analyses.”

Holknekt asked in response: “How did he know that? And how could he be so sure? And did they really want to?”

And of course, crucially, he asked why Lindwall has now stood up in court claiming not to know how the processes work.

Holknekt provided some background on Betsson’s latest legal battle, claiming: “The man who has now sued Betsson in the Uppsala district court is a severely addicted young gambling addict who had been drawn into the gambling swamp and over time had come to be systematically exploited by Betsson until the day came when he lost everything and more. 

“After all, he belonged to the 4% of the company’s customers who accounted for at least 50% of the business. The company’s most important customers.”

If businesses identified and blocked such customers from playing, Holknekt argues, “you would simply lose your profitability and go bankrupt as a company”.

Instead, he argues, modern operators are doing the opposite, accusing them of enticing addicted players to increase how much and how often they gamble.

After providing some background on established links between gambling addiction and suicide, Holknekt concludes his piece with a visceral description of how he views the industry.

It consists, for him, of gambling business owners taking “blood money for another yacht in Marbella or Malta”.