Each month, Australian bookmaking legend Tom Waterhouse publishes a newsletter from Waterhouse VC, his gaming and wagering-focused venture capital fund.

Since inception in August 2019, the fund has achieved a gross total return of 2,744% through to 31 January 2024.

In collaboration with NEXT.io, the February edition of Waterhouse VC looks at the complexities of professional betting and the inescapable comparisons with investing.

Rain Man

For most of us, it is hard to fathom the mathematical capability possessed by a small number of people.

It is even more impressive when these individuals can combine several rare skills together with business acumen to develop a highly profitable enterprise.

We believe that professional betting is one of the most difficult fields in the world. The three keys to winning at betting are: making correct bet selection; betting at an attractive price; correctly staking (knowing how much to wager on each selection).

Successful professional betting requires a combination of incredibly challenging skills, such as:

Knowing a sport back to front, including every player statistic, every last minute change, every location and playing surface (e.g. clay/grass/hard tennis courts, Emirates Stadium vs Etihad Stadium).

Complex modelling of the many hundreds of various factors that determine a player or team’s likelihood of winning and consequently, their ‘true’ odds compared to the odds offered by bookmakers (e.g. time since last match, social media activity, injury statistics, travel time to a match, age, weather, and why the market has got it wrong).

Running a betting business (e.g. managing bet placement, bet settlement risk, accessing rebates, intellectual property theft risk, bet theft/leakage of bets risk).

We believe that there are less than 50 betting syndicates globally that are able to win more than a million dollars per annum through betting, and a handful that win around a billion dollars.

Waterhouse VC owns a stake of one of these syndicates, which focuses primarily on tennis.

The syndicate’s advantage is challenging to duplicate because of the extensive proprietary historical data that it possesses and the sophisticated factors integrated into its models.

In addition to Waterhouse VC’s stake in ‘Project Tennis’, the fund is exploring further opportunities in professional betting.​

These opportunities are incredibly hard to find and evaluate without specific domain expertise.

Paid to play

One reason there are so few successful professional racing betting syndicates is that existing large racing syndicates benefit from receiving rebates on their bets, regardless of result, effectively increasing their ‘edge’ and making it even harder for emerging syndicates to compete.

Racing syndicates receive rebates from pari-mutuel/tote betting in exchange for providing liquidity. To qualify for these rebates, syndicates must wager substantial amounts of money.

For instance, US totes typically extend rebates solely to those who bet over $5m annually, according to Sports Trading Network.

The cumulative effect of their rebate advantage has resulted in substantial profits for the largest syndicates.

Greed is not good

Human behaviour is one of the key contributors to financial cycles as investors swing between fear and greed.

Human behaviour allows trading firms to profit from the emotionally driven decisions of retail investors.

Such a dynamic also exists in betting, whereby professional betting syndicates can profit from retail gamblers through exchanges like Betfair and Matchbook.

Succumbing to fear and greed rather than solely making analysis-driven decisions is a major pitfall for investors and bettors alike.

Numerous cognitive biases, for example the illusion of control, make successful investing and betting incredibly challenging.

Even professional fund managers who possess all necessary technical resources and employ the world’s brightest analysts generally deliver performance below the market to their investors.

Over the past decade, 85.6% of active funds have generated lower performance than the S&P 500, with underperformance rates exceeding 80% across developed markets.

Warren Buffett, often considered the world’s best investor, won a million dollar bet that the market would outperform active management.

Greedily flipping coins

Several experiments have looked into how people think about money and make financial decisions.

In one experiment from 2013 by Victor Haghani and Richard Dewey, people played a game where they flipped a virtual coin.

They were told the coin had a 60% chance of landing on heads. Each person got $25 to start and could bet however they wanted.

After 30 minutes of flipping the coin (time for about 300 flips), they received the final payout, which was limited to $250.

Haghani and Dewey calculated that 95% of people were expected to reach the $250 payout limit.

But in the end, 33% of people lost money, and only 21% got to $250. Further, 67% of people even tried their luck at least once betting on tails, even after they had been told that tails only had a 40% chance of landing, another example of the illusion of control.

Kelly Criterion

The principles guiding success in the coin-flipping experiment can be applied to both professional betting and investing.

A simple application of the Kelly Criterion (K%) would have effectively maximised the payout from the coin-flipping activity.

The Kelly Criterion aids investors and bettors in optimising portfolio or bankroll diversification. It determines the ideal allocation of funds to each individual investment or bet.

Applying the Kelly Criterion to the above coin-flipping experiment results in betting 20% of your money each time (K% = 20%).

For example, starting with $25, you’d bet $5 first. If you win, you’d then bet $6 of the $30 you have. If you lose, you’d then bet $4 of the $20 you have left, and so on.

Another example highlighting the significance of the Kelly Criterion is presented above with a bet that has a 51% chance of winning.

If you bet too cautiously (e.g. 2% of your money each time – refer to the green / second best performing line), you’ll do okay but not great.

If you bet too much (e.g. 15% of your money each time – refer to the brown / second worst performing line), you’ll end up losing everything.

This illustrates how crucial position sizing is in both betting and investing – small changes in how much you bet determine whether you succeed or lose everything.

Whilst it is very difficult operationally (selecting and placing bets effectively) and cognitively (overcoming biases and applying Kelly Theory) to win at betting, there are several groups that do so very successfully.

For wholesale investors interested in following wagering and gaming industry news and trends, please follow our updates on Twitter (@waterhousevc) or through our website at WaterhouseVC.com.

Flutter Entertainment has extended its B2B partnership with French operator PMU.

The extension will see Flutter provide its multi-channel B2B sportsbook platform to PMU, which will become the first brand outside the Flutter umbrella to use the technology.

The pair first signed a strategic partnership in 2010. Since then, Flutter has provided event management, fixed odds pricing and risk management services to the operator.

This allowed PMU to benefit from the same trading system as is deployed across all of Flutter’s B2C and B2B brands globally.

Tom Bowry, chief strategy officer at Flutter, said: “We are delighted that PMU has chosen to extend our partnership and become the first external brand to adopt our B2B sportsbook platform.

“This sportsbook solution has been developed through a relentless focus on innovation and is powered by the exceptional expertise derived from our global portfolio of brands.

“We are excited about our B2B sportsbook capabilities and the opportunities available to us in the future as we continue to invest to meet evolving customer needs and expectations,” he added.

PMU – operating since 1930 – is the number one horse race betting operator in Europe and the third largest worldwide.

The company boasts 1,100 employees and operates in France online, as well as across 14,000 retail outlets and French racecourses.

Horse race betting represents more than 90% of PMU’s business, which diversified into sports betting and poker when the French market regulated back in 2010.

PMU’s financial rewards are fully redistributed to the French horse racing associations in charge of organising the races. That figure came in at €835m for 2023.

PMU effectively finances the French horse racing industry while ensuring its sustainability with support for jobs across the sport.

Emmanuel Vacher, e-commerce director at PMU, said: “PMU is the undisputed leader in the online horse racing betting market and also offers sports betting and poker.

“In sports betting, we were looking to simplify our architecture through a turnkey solution and to concentrate our efforts on marketing and CRM.

“Flutter’s offering meets this need. Alongside them, we are now engaged in a multi-year partnership,” he added.

Vacher said the Flutter software should help PMU to create a leading sports betting user experience as it looks to gain market share in the country.

European operators including Kindred Group and Betsson have also experimented with providing B2B sportsbook technology in recent years.

Kindred Group has committed to developing a proprietary sports betting platform, calling time on its long-serving partnership with Stockholm-listed supplier Kambi.

Fellow French gambling giant FDJ lodged a €2.45bn offer to acquire Kindred Group in January.

The deal, which has been unanimously recommended by the board and approved by major shareholders, would include the in-house Kindred Sportsbook Platform (KSP).

Stake deal could hit skid mark

It might be a case of full throttle into murky waters for Swiss racing team Sauber, who unveiled their shiny new C44 car in London on Monday, only to find the glitz overshadowed by a regulatory speed bump.

Their new main sponsor, crypto casino giant Stake, has emblazoned its logo on everything from the car to the crew’s new threads, injecting a dose of high-octane neon green controversy into the mix.

Sauber team boss Alunni Bravi is revved up about the new partnership, touting Stake as a turbo-boost to Sauber’s fan base and fortune.

But there’s a ‘but,’ and it’s a big one, according to Swiss news site SRF.

The sponsorship will not wash in countries where gambling ads are as welcome as a puncture on race day. The plot thickens back home in Switzerland, where Stake is playing the part of an unwelcome gatecrasher – it does not have a local licence, which makes its ubiquitous logo a bit of a no-no.

This has caused the Swiss Federal Casino Commission to wave the yellow flag by opening proceedings against Sauber, which could see the team cough up half a million francs as punishment.

So as the new F1 season gears up, Sauber’s got more than just rival teams to outmanoeuvre – it has legal loops to jump through and could be in for a bumpy ride.

Jeff jumps out of his skin

The Guardian this week turned its attention to the controversial world of skins gambling in online gaming, telling its readers the story of Jeff, a professional video gamer, with 750,000 subscribers on YouTube alone.

Jeff, who is skilled in Counter-Strike: Global Offensive (CS:GO), declined a lucrative marketing deal to advertise skins gambling, which he believes is negatively impacting young gamers.

“I wanted to show how unregulated gambling is rotting the brains of young people,” he said.

Skins, virtual items within games that can be bought or won, have become a significant aspect of online gaming, offering gaming companies a new revenue stream beyond initial purchases.

“Some skins carry enormous price tags in the real world,” the article reads. “One website that tracks skin prices values a ‘Gungnir’ sniper rifle, available in the CS:GOgame, at more than $18,000.

“A knife – a ‘factory new, case-hardened Karambit, pattern 387 (blue gem)’ – is reputedly the most expensive CS:GOskin in history, attracting a $1.5m offer that its owner turned down. Further down the scale, guns, outfits, stickers and knives sell for hundreds of dollars,” the writer reports.

However, what concerned Jeff most was not the skins themselves, but the fact that a host of third-party marketplaces, such as SkinBaron and Skinwallet, allow gamers to sell skins for real money.

The operator that offered the promotional deal to Jeff, Cyprus-based KeyDrop, attracted almost 17 million visitors in one month last year, states The Guardian.

To use these sites, players must have an account on gaming platform Steam, where gamers can buy skins. Steam was created by the maker of CS:GO, US-based game developer Valve.

Jeff believes that while Valve doesn’t endorse skins gambling or take a cut when players cash out their winnings, it still indirectly benefits from this overlooked industry.

“It [skins gambling] helps drive the value of the skins up and Valve takes a cut of every Steam market sale. So in the end they get more,” Jeff asserts.

Numerous other entities in the online gaming sphere also reap the rewards.

Upon rejecting the offer to endorse skins gambling, Jeff created a documentary to voice his concerns about the industry, exposing that some of the biggest names in esports earn substantial incomes from sponsorship deals with the websites he opposes.

Jeff’s decision to expose the practices has drawn backlash.

While ordinary gamers have largely applauded his actions, with overwhelmingly positive comments on YouTube, Jeff has also faced threats and intimidation.

“We know where you live my dude,” wrote one anonymous individual. Ah, that old chestnut.

MP warns of parliamentary ‘illiteracy’ on racing

As the starting gates open for a pivotal Commons debate on affordability checks, there’s a jockeying for position among MPs, and not all of them know their furlongs from their finishes.

Conor McGinn, co-chair of the all-parliamentary group for racing and bloodstock, is saddling up for a February showdown that could see financial checks rein in the industry.

But according to the Racing Post this week, he’s bracing for a hurdle: a “real illiteracy in parliament around horseracing and gambling.”

Gone are the days when MPs could tell a trifecta from a treble, laments McGinn, an independent, ex-Labour MP whose turf includes Haydock.

Today’s political handicappers are quick to moralise on wagers they’ve never placed, he suggests, eager to dictate the spending habits and leisure pursuits of their constituents.

The petition against these checks, championed by Jockey Club chief executive Nevin Truesdale, has McGinn and racing’s backers champing at the bit.

“We’re the last of the Mohicans,” he declared, determined to defend the punter and the sport against the odds.

He also urged the racing world to embrace its bond with betting – a relationship that should be championed, and not shied away from.

As the debate looms, the industry finds itself in a race against more than just time – it’s a battle for understanding, acceptance, and the freedom to bet on a good time.

Shares in BetMakers have risen 25% from A$0.08 to A$0.10 following the release of the supplier’s Q2 FY24 financial results.

The results, covering the three-month period ended 31 December 2023, showed a 10% year-on-year increase in revenue for the sports betting supplier to A$25.1m.

Alongside its revenue increase, BetMakers also saw significantly reduced staff costs (down 29.2% to A$12.3m) and operating expenses (down 27.7% to A$5m), compared to the prior year.

Those cost reductions led the business to a significantly reduced EBITDA loss of A$1.2m, as compared to the A$9.1m EBITDA loss registered in Q2 FY23.

Lower staff costs followed on from a business restructure implemented last year, which saw the firm reduce its headcount from 568 in December 2022 to 412 in December 2023.

The business intends to continue reducing its cost base this year, it said, with a target to have costs 10% lower in the second half of the financial year than in the first.

As of the end of the reporting period, BetMakers held A$18.1m in unrestricted cash.

That figure fell short of its minimum unrestricted cash target of A$20m, the firm said, as the result of a shortfall in receipts primarily from two customers, collectively worth around A$2m.

Key events

Key events during the quarter included the renewal of several of BetMakers’ existing client contracts.

Those included deals with The Meadowlands in New Jersey, ZeTurf in the Netherlands, William Hill in the UK and PointsBet in Australia.

The company also signed a new customer, the Selangor Turf Club in Malaysia, and expanded its agreement with the Argentina Jockey Club during the quarter.

Further, in the US the company launched its OneWatch terminal monitoring system, enabling the remote monitoring of betting terminals and thus allowing BetMakers to run its US tote operations from a lower cost base.

“New systems such as OneWatch have been instrumental in allowing the company to simplify its operating model and reduce its headcount,” BetMakers said.

Share price performance

Investors reacted positively to the news as shares jumped from A$0.08 to A$0.10 in the wake of the results.

Shares in the company remain at a relative low point historically, however, having dropped precipitously since hitting a high point of A$1.50 in May 2021.

The shares continued to drop steadily throughout 2022 and 2023, and first hit their A$0.08 low in October last year.

The recent share price increase may be a sign of recovering confidence in the business.

Management commentary

“BetMakers has continued to simplify its operating model and sharpen its focus moving forward,” said CEO Jake Henson upon the release of the results.

“The business is now defined across two operating segments being Global Betting Services and Global Tote, and the company has worked hard to streamline the operations to support these two pillars. 

“With a much simpler and aligned business focus we expect to continue to unlock operational savings and enable scalability through technology. 

“Renewed contracts with key partners continue to support our growth, whilst new customer onboarding is advancing strongly into the second half of FY24. Bringing these new opportunities to market remains a key operational focus in H2 FY24. 

“Whilst we have made significant progress over the last 12 months, we’re conscious that the job is not finished. We remain very focused on achieving positive underlying EBITDA and operational cash flows, to provide a sustainable foundation for future growth.”

Andrew Rhodes, the Gambling Commission’s (UKGC) chief executive, has defended the regulator’s work in the face of an increasingly acrimonious national conversation.

In a speech to industry executives, Rhodes noted how polarised the debate around gambling has become in the UK, highlighting the body’s previous work in challenging “misrepresented statistics”.

“Everyone is entitled to their opinion, but some of what has gone on has been an unedifying sight and I am not sure is helping anyone,” he said.

As such, the Commission chief said he was committed to having difficult conversations with industry.

As part of this, Rhodes called for a more “grown-up relationship” with the sector. He argued this involves being transparent about important issues and taking a collaborative approach in addressing them. 

Debate around affordability checks rages on

Certain aspects of the governments planned reform of the gambling industry, as laid out in April’s Gambling Act review white paper have been subject to controversy. 

A particular flashpoint has been the imposition of affordability checks. The Commission has said light checks will trigger at a £125 net loss over 30 days, with more rigorous credit checks to kick in for customers spending £1,000 in a 24-hour period. 

Much of the debate has centred around the UK racing industry, which depends heavily on gambling income. Some campaigners are sceptical the checks will be truly “frictionless” as promised by the government.  

A petition launched by the head of the Jockey Club to halt the introduction of affordability checks has reached 77,000 signatures as of 10 November. 

Rhodes argued the debate around horse racing has become “exceptionally difficult and sometimes very bitter”. 

He cautioned that the regulator would not give the horse racing sector special treatment. 

“It is not the job of the Gambling Commission to consider or advise on the wider implications for any given sport – that is the role of DCMS,” he said. 

“However, that doesn’t mean the Commission does not therefore consider what is proportionate or is indifferent.”

To this end he highlighted the Patterns of Play research highlighting that horse racing betting receives disproportionate revenue from a small group of customers, even more so than other forms of sports betting. 

“The current campaign from many in the horseracing industry is to petition that there should be no checks at all on how affordable someone’s gambling is on horseracing,” he said. 

“This is a point of principle disagreement – it does not matter whether checks are frictionless or not, the point of the argument is there should be no checks at all.

“The call being made here is for unlimited and, quite literally, unchecked gambling losses on a sport, to support the growth and continuation of that sport.”

Rhodes ultimately rejected the arguments from the racing industry, suggesting that the industry was only in this situation because there have been too many egregious cases in the past.

“Socially and politically unacceptable”

These stories, he said, have become “socially and politically unacceptable” as such enforcement action escalated and ultimately a line was drawn.

“A year ago I set out, at a high level, how I wanted our relationship to work,” said Rhodes. “There is an unavoidable and inescapable tension between the regulator and the regulated. However, that does not need to be adversarial as a point of principle.

“Compliance is non-negotiable and having a better relationship, a more constructive mutual relationship, does not mean standards drop. It can mean, however, we navigate difficult things in a better way and that is very much my intention.”

BetMakers Technology Group grew its revenue 9.3% to A$26.1m in Q1 of the financial year 2024 (three months ended 30 September 2023).

Following that growth, the group reported a narrowed EBITDA loss of A$767,000 for the quarter, down from a A$6.5m loss in the prior-year comparative period.

The business still declared a net loss of A$7.6m, however, compared to a A$5.9m net loss in Q1 FY23.

BetMakers ended the quarter with a cash balance of A$36.2m, including unrestricted cash of A$22.5m.

The company’s management team is now working towards maintaining an unrestricted cash balance of at least A$20m, it said.

US restructure completes

In addition to its improving financial situation, BetMakers also announced it had completed a restructure of its US operations, intended to streamline the business and reduce costs, thus providing it with “a strong footing to build further scale in the US in a profitable way.”

Now, the company is focused on continuing to reduce costs throughout the rest of the financial year, which it expects will help bring it towards a cashflow breakeven point.

“The team has done a great job in simplifying our operating model and sharpening our focus over the past six months,” said BetMakers CEO Jake Henson (pictured).

“With our suite of market-leading technology for the racing and wagering industries, the company is focused on growing our reach as a B2B operator on a scalable cost base.

“There will be a continued focus on reducing and normalising the cost base, and we expect to achieve stronger underlying cash receipts in Q2 due to, among others, the commencement of a new racing season and the onboarding of new clients.”

Development continues

In addition to the above developments, the company also extended contracts for the provision of its pricing software and data delivery services with several of its key partners during the quarter, including Penn Entertainment, Dabble, PointsBet and William Hill/888.

It also continues to develop its NextGen platform, “that will underpin how it services its digital customers globally into the future,” it said.

“Refinement and customisation continues on this platform which will be a transformational year for BetMakers digital customers in the US, Australia, Asia and Ireland.”

The NextGen platform recently passed a successful load test of 10,000 bets taken per minute, while successfully processing and resulting more than 200,000 bets in production over a three-minute period.

Other business updates during the quarter included an agreement with Caesars Entertainment, which saw the operator embed BetMakers’ tote solution for point-of-sale wagering in Nevada. 

The solution is now entering its final stages of testing and both parties are pushing to go live before the end of calendar year 2023, BetMakers said.

In addition, a new national tote system for Norway, implemented through state-owned operator Norsk Rikstoto, is on schedule to go live during Q1 of calendar 2024, marking the beginning of a 10-year service agreement.

GGR from France’s commercial online gambling sector grew by 10.1% year-on-year to €1.18bn in H1 2023, according to statistics published by the Autorité Nationale des Jeux (ANJ).

Commercial sector breakdown

That figure still left the sector slightly behind where it was two years ago in H1 2021, however, when online GGR reached €1.21bn.

Of the H1 2023 total, €750m came from the online sports betting segment, up 9.5% year-on-year.

GGR from horse racing betting grew by 4.7%, meanwhile, to €177m, while online poker GGR leapt 16.2% to €251m.

While all segments recorded year-on-year growth compared to H1 2022, online poker was the only game type to see better results in H1 2023 than in H1 2021.

The ANJ said that was down to several factors in 2021, including the postponed Euro 2020 tournament and the closure of retail betting outlets amid the Covid-19 pandemic.

Across all commercial online verticals, there were a total of 3.86 million active player accounts in H1 2023, up 3.3% year-on-year.

Sports betting breakdown

Football remained by far the most lucrative sport for operators within the online betting segment, accounting for 58.2% of all H1 GGR in the segment at €436.8m.

Tennis was the next most popular sport, generating €175.4m in GGR or 23.4% of the total.

Meanwhile, basketball bets accounted for 10.3% of GGR at €76.9m, while rugby generated a further 1.2% of GGR at €9.2m.

The total €750m in online sports betting GGR was generated from €4.19bn in handle, giving operators a hold rate of around 17.9%.


While the commercial online sector continued to grow, France’s state-owned lottery and horse racing operators, La Français des Jeux (FDJ) and Pari Mutuel Urbain (PMU), continued to account for the majority of revenue in the French gambling market.

FDJ generated €3.3bn in GGR from €10.48bn in stakes, giving year-on-year growth rates of 2.4% and 4.5% for each of those metrics, respectively.

Meanwhile, PMU generated €873m in GGR, up 0.7%, from €3.43bn in wagers, up 1%.

Changes afoot

In May this year, a new legislative bill was introduced to France’s National Assembly, proposing to introduce regulated online casino to the market.

Despite being home to a lively online betting market and more than 200 land-based casinos, online casino remains forbidden in France.

According to a proposed timeline, French companies are set to be permitted to launch online casino operations in 2025, beginning a five-year ‘moratorium’ period which would see international operators excluded from the market.

According to the bill, that timeline would allow “national players to develop in serene economic conditions before a total opening planned for 1 January 2030.”

Statistics previously published by the ANJ suggest between 1.4 million and 2.4 million French players currently use overseas, unregulated operators to play online casino.

Those figures led strategic advisory business Regulus Partners to suggest that customers in the country currently spend around €2bn annually in the unregulated online casino sector.

The introduction of online casino regulation is therefore expected to significantly bolster the GGR figures of France’s online gambling sector in the coming years.

Altenar, the leading sportsbook and iGaming software provider, has boosted its global presence thanks to a new deal with betting platform, SpinBet.

The partnership will see Altenar supply its world-leading services to SpinBet in New Zealand – a new region for Altenar.

Altenar’s product will be going online in New Zealand with SpinBet taking a particular focus on Altenar’s innovative horse racing offering.

Dubbed New Zealand’s biggest betting platform, SpinBet also offers a standalone online casino, SpinBit, with a variety of classic table games and live games on offer to players across the jurisdiction.

With the deal now live, SpinBet is bolstering its sports offering via Altenar’s comprehensive selection of pre-match and live odds, with horse racing taking precedence over other global sports such as basketball, soccer, and volleyball.

Once Altenar has established a footprint across the region, the partnership is set to branch out into North America, Latin America, and India in the near future.

Commenting on the deal, Charlie Williams, commercial director at Altenar, said: We are thrilled to enter the New Zealand market for the first time through this partnership with SpinBet, one of the region’s most established operators.

“New Zealand is a new and exciting market for us, so we are eager to boost Altenar’s outreach in this territory, before looking to extend the SpinBet partnership further in the coming months.”

Niall Thomas, co-founder at SpinBet, added: “To collaborate with Altenar, an award-winning sportsbook with a revered reputation globally, is a massive boost for us as we look to extend our offering outside of New Zealand.

“This partnership showcases SpinBet’s determination to prove itself as a leading online operator within New Zealand and with Altenar’s world-leading product, we believe we can make a name for ourselves across Asia and the Americas in the next few years.”

Altenar has received sustained recognition over the years with multiple award wins in the past year, including the MiGEAs, EGR Nordics, EGR Italy, SBC Latin America and the Baltic and Scandinavian Gaming Awards.

Licensed across a total of 13 major global markets, including certifications from the UKGC and MGA, Altenar has established itself as the sportsbook provider of choice for multiple leading operators. 

UK bookmaker bet365 is set to enter its sixth US state when Kentucky launches its regulated online gambling market in September.

Kentucky is set to launch retail sports betting on 7 September, while online betting will follow on three weeks later on 28 September.

Customers will be able to pre-register with online sportsbooks from 28 August.

So far, eight sportsbooks have been pre-approved for licences by the Kentucky Horse Racing Commission.

In addition to bet365, the approved operators are FanDuel, DraftKings, BetMGM, Caesars, Circa, Fanatics and Penn Entertainment.

Each of the operators is partnered with one of Kentucky’s racetracks, which are permitted to partner with up to three different sportsbook operators.

Both DraftKings and Circa, for example, are partnered with the Cumberland Run racetrack.

Bet365 prepares for launch

In order to secure its licence, bet365 is partnered with Sandy’s Gaming and Racing, a $75m quarter horse racetrack and entertainment facility currently under construction, which is expected to open this autumn.

Sandy’s is also partnered with MGM Resorts International and Entain joint venture, BetMGM.

The racetrack itself is a joint venture between horse racing real estate development and operations group Revolutionary Racing Kentucky and the Eastern Band of Cherokee Indians.

“We are thrilled to partner with Sandy’s Racing & Gaming,” said a spokesperson for bet365.

“Renowned as the best same game parlay experience and fastest in-play product in the industry, we’re looking forward to bringing the bet365 brand to the Bluegrass State.”

Revolutionary Racing CEO Prentice Salter added: “This is an incredibly exciting time to be a sports fan in Kentucky.

“Bet365 is a trusted, safe and fun way to place wagers on sports and we are proud to partner with them and offer this option to fans across the Bluegrass State.”

Bet365 is expected to deliver bespoke promotions to new and eligible customers in the state, and will allow bettors to live stream sports events while offering its usual roster of features including in-play betting, same game parlays and early payouts.

In June, bet365 marked its fifth US state launch with its entry into the Iowa market. The operator is also live in Colorado, New Jersey, Ohio and Virginia.

Entain has provided an update on the strategy surrounding its two biggest investments in recent months, its strategic partnership with TAB NZ and acquisition of 365scores.

TAB NZ agreement details

CEO of Entain Australia and New Zealand Dean Shannon gave an update on the firm’s new agreement with New Zealand’s only licensed betting operator, TAB NZ.

First agreed in March this year, the 25-year agreement went live last week on 1 June.

The agreement sees Entain assume the management rights of TAB NZ’s Wagering division, as well as its Trackside Media business.

TAB’s Wagering division provides racing and sports betting in both retail and online environments, and is New Zealand’s only betting licensee.

The deal therefore provides Entain with unrestricted access to the New Zealand betting market, estimated to generate revenue of some NZ$600m annually from NZ$2.5bn in betting handle.

TAB also operates TAB Trackside, the largest sports outside broadcasting operation in New Zealand, having broadcast over 100,000 races to customers over the past 12 months.

TAB NZ will retain its online and land-based gaming revenue, machines and leases for shops with machines, with Entain managing the operations on a service fee basis.

In addition to taking over the management rights of TAB’s existing brands, Entain will have the opportunity to launch a new, digital-only sister brand in New Zealand.

TAB deal commercial structure

The commercial structure of the deal sees Entain and TAB NZ split gross profits from the operations 50/50, with a minimum return guarantee to TAB for the agreement’s first five years. Entain will be responsible for all marketing and operating expenses.

Entain paid an initial upfront consideration of NZ$160m under the deal, including NZ$10m in direct funding to New Zealand’s horse racing industry.

Throughout the rest of the deal’s term, Entain has committed to a minimum annual return of NZ$150m back to TAB NZ, which it said “will allow the right investment to be put back into racing immediately,” and “benefit all stakeholders in the ecosystem in coming years.”

TAB NZ boasts more than 250,000 active digital customers, and generates more than three quarters of its wagering revenue from online betting, with the remainder coming from retail and on-course betting.

The new agreement with Entain will help TAB deliver “an enhanced betting experience” to customers in New Zealand, it said, leaning on the FTSE 100 operator’s product expertise and global reach to improve its offering.

Entain estimates the New Zealand betting market to grow some 35% over the next five years to generate more than NZ$800m annually.

Presently, Entain estimates around 30% of New Zealand’s NZ$600m betting market is lost to offshore operators, which the group hopes to “win back” through enhanced products and offerings, as well as the launch of its new sister brand.

TAB’s New Zealand betting operations have a steady operating expenses base of NZ$110m-120m, according to Entain, with capital expenses of around NZ$5m.

Entain expects total marketing and operating expenses for the operations to be around NZ$140m-150m per year.

The first 12 to 18 months of the deal will be an investment period for Entain, it added, allowing it “to establish the right framework for the remaining 23 years of the partnership.”

365scores acquisition details

Elsewhere, Entain provided a further update on the strategy surrounding the newly acquired 365scores business.

Entain first agreed to buy the sports media business for £120m in April, with potential additional contingent payments of up to £8m also making up part of the deal.

The brand provides sports information focused primarily on live scores, as well as editorial and social content and free-to-play games.

Commenting on the acquisition in Entain’s latest update, the operator’s chief strategy officer and president of new ventures Sameer Deen said it was clear “the important role that sports content and data will play in our industry going forward.”

Deen led the process of acquiring the business and will be responsible for the brand going forward.

With some 18 million average monthly users, Deen said 365scores is expected to provide Entain with several strategic and financial opportunities in the future.

The brand’s app ranks among the top five sports industry apps globally, and holds an even stronger position in Latin American markets where it is ranked in the top three.

In addition to its large user base, those users are also highly engaged, Deen pointed out, with returning app users visiting the brand around 100 times per month – compared to traditional betting app averages of around five times per month.

Entain intends to leverage that customer base to broaden its existing offering, deepen its presence with customers and expand across recreational audiences.

In addition, the data-rich business will help to enhance Entain’s insight on customer interests and behaviours, Deen added.

The brand is expected to generate EBITDA of £23m-£30m by 2025, meaning the deal had “an attractive financial profile before including any revenue synergies,” Deen said, with the acquisition price set at between 4x and 5x the brand’s expected 2025 EBITDA.

Collaborations and partnerships between 365scores and Entain’s existing brands are expected to add “some incremental upside” in the coming years, Deen concluded.

Updates on such synergies will be made available by Entain in the future.