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  • Waterhouse VC July update: Affiliates and their potential for crypto wagering

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 1,891% through to 30 June 2023.

In collaboration with iGaming NEXT, the July edition of Waterhouse VC takes a deep dive into the world of gambling affiliation, and its potential for the crypto gambling sector.

Checking the fiat odds

As outlined in our previous newsletters (for instance, July 2022), wagering affiliates mainly earn their revenue by directing bettors to bookmakers. The primary revenue models employed are revenue sharing and cost per acquisition (CPA).

There exist several strategies for wagering affiliates to channel traffic towards bookmakers, such as creating sports-centric media content or contrasting various bookmakers’ odds and promotions.

An example of one of the most well-known bookmaker comparison websites is Oddschecker. The platform compares odds and promotions from more than 25 UK bookmakers while also offering betting tips and insights.

Comparing odds for the 4th Ashes test. Source: Oddschecker
Comparing odds for the 4th Ashes test. Source: Oddschecker

Affiliates like Oddschecker particularly thrive in emerging markets, like the US, where operators fight fiercely for customer acquisition. Both large and small operators spend up to $1,000 to acquire a customer, leveraging all available marketing channels, including affiliate marketing. The two largest US wagering operators spend over $1bn on marketing.

A number of affiliates have identified the potential in the US market, concentrating their organic growth and M&A activity in this region. In May 2021, Better Collective completed its $240m acquisition of The Action Network, a US-based affiliate offering odds comparison, various podcasts, and other types of media content.

Comparing odds for Major League Baseball. Source: The Action Network

In July 2021, Bruin Capital purchased Oddschecker from Flutter for a potential total of $218m ($190m upfront plus deferred considerations). With this acquisition, Bruin plans to enhance Oddschecker’s services while supporting its foray into the lucrative US market.

“There are strong links between Oddschecker’s UK development and its opportunity in the US, where the marketplace is very fragmented, and discovery and customer acquisition experts will be highly sought after.”

– George Pyne (founder of Bruin Capital)

Furthermore, in November 2021, FansUnite acquired American Affiliate, a collection of US affiliate websites, for $58.2m (equivalent to 9.7x EBITDA). At the time of the acquisition, American Affiliate had delivered 150,000 new depositing customers to US wagering operators, including DraftKings, FanDuel and BetMGM.

Checking the crypto odds

While the US and other newly regulated markets present exciting opportunities for affiliates, we are particularly enthusiastic about the prospects for affiliates focused on directing bettors towards crypto wagering operators.

We last covered the broader opportunity in crypto wagering in May. According to GlobeNewswire, the global online wagering industry generated revenues of approximately $58.2bn in 2021, with a projection of $145.6bn by 2030. We foresee that the industry’s future growth will primarily be driven by the widespread adoption of crypto wagering.

Similar to the US market dynamics, numerous crypto wagering operators are currently vying for market share. Consequently, affiliates are well-remunerated for delivering depositing bettors to crypto operators. Revenue shares offered to affiliates can be as high as 50%.

We believe that there is a particularly significant opportunity for a comparison website dedicated to crypto operators. This untapped opportunity will remain attractive as the crypto wagering industry matures.

Mock-up user interface for a crypto operator comparison website. Source: Betscanner

Considering that OddsChecker was sold for $218m and generates 97% of its revenue from the UK, an odds comparison website operating in the substantially larger crypto wagering segment presents an immense opportunity. Furthermore, unlike crypto operators themselves, affiliates are typically valued at a significantly higher multiple of earnings. For example, Better Collective is currently valued at 12.5x EBITDA.


Betscanner’s main service will be to compare odds from sporting events offered by crypto bookmakers. The data required for odds comparison will be obtained either via data scraping or through direct partnerships with the bookmakers, with a focus on improving live odds comparison, user experience, and esports.

When established, revenue sources will include operators paying monthly retainers to not only drive new traffic but also ensure that they retain existing users through market visibility. Marketing tactics will encompass SEO, Google Ads, influencer marketing, social media campaigns, and exclusive sign-up bonuses.

Betscanner is one of several exciting opportunities that Waterhouse VC is participating in.


On 21-22 June, our portfolio manager, Peter Stevens, spoke at iGaming NEXT Valletta on the topic “State of play: Can the economic crisis yield unique opportunities?”. If you would like to watch the panel discussion, here is the link.

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.

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 1,863% through to 31 May 2023.

In collaboration with iGaming NEXT, the June edition of Waterhouse VC takes a deep dive into some of the world’s most successful investors and how their strategies align with professional betting behaviour.

Convergence of betting and investing

“The market is a racetrack too. But I was not developing elaborate theories in those days. I was just a little kid.”
Warren Buffet (Neckar Substack)

World-renowned investor Warren Buffett (chairman and CEO of Berkshire Hathaway), and numerous other famous investors were initially influenced by betting and bookmaking (particularly horse racing) before transitioning to financial markets.

The new wave of professional bettors are now finding success in financial markets as well, with significant cross-over in the statistical analysis and thought processes applied across the two domains.

For example, one prominent framework utilised by both investment firms and professional betting syndicates is the Kelly Criterion. Furthermore, in both betting and investing, the impact of decision-making biases and human psychology is critically important.

Warren Buffet

“You could get old racing forms… I would go through them using my handicapping techniques to handicap one day and see the next day how it worked out. I ran tests of my handicapping ability day after day.”

One may expect these to be the words of a professional bettor but they are in fact from Buffett.

Few people know that much of Buffett’s formative years were significantly influenced by horse racing.

He fervently assessed the Daily Racing Form and having figured out the probability of each horse winning a race, he even did some of his own bookmaking at the Preakness Stakes in Baltimore.

Through betting, Buffett learnt several important investing lessons, including:

“You’re not supposed to be every race” (Maiden King) – When applied to investing, this could be interpreted as there being no need to always actively invest and that it is sometimes best to do nothing.

“You don’t have to make it back the way you lost it” (Maiden King) – When applied to investing, this could be interpreted as the need to pivot investment strategies according to market conditions.

Jeff Yass

“If you’re the sixth-best poker player in the world and you play with the five best players, you’re going to lose… If your skills are only average, but you play against weak opponents, you’re going to win.”

Jeff Yass (co-founder of trading firm Susquehanna International Group) said the above when asked to describe Susquehanna’s trading strategy.

In 1985, Yass and a couple of friends bet at a track outside Chicago using analysis from a Compaq computer.

With the assistance of a statistician who had worked for NASA on the moon landing, they bet $160,000 across tens of thousands of wagers to get the exact order of seven horses in three races, ultimately winning $760,000, which was then the largest win in American racing history.

The win was never honoured, although Yass went on to make $28.5bn through Susquehanna according to Forbes.

Similarly to Susquehanna, the world’s largest betting syndicates have turned their attention to financial markets, trading equities, FX and derivatives.

For example, one of the world’s largest betting syndicates is now trading $40bn a week on FX.

On the flip side, prominent international investment firms like Susquehanna are also applying their expertise to professional betting.

In 2017, Susquehanna launched Nellie Analytics, based in Dublin, with a specific focus on sports betting.

In 2022, Susquehanna acquired a 12.8% equity stake in PointsBet, creating an opportunity for Nellie Analytics to explore a partnership in delivering sports analytics and quantitative modelling services to PointsBet.

Mohnish Pabrai

“Investing is just like gambling. It’s all about the odds. Looking out for mispriced betting opportunities and betting heavily when the odds are overwhelmingly in your favour is the ticket to wealth.”

Mohnish Pabrai (Founder of Pabrai Funds) is a fervent follower of Warren Buffett and Charlie Munger.

He published a thorough framework for value investing, ‘The Dhandho Investor’ (Dhandho is a Gujarati word translating to “endeavours that create wealth”).

There are numerous key ideas explained through betting analogies in Pabrai’s book. For example, he believes that the best way to increase returns and reduce risk is by making “few bets, big bets, (and) infrequent bets”.

He often relates betting analogies to the Kelly Criterion, which is regularly applied to both professional betting and investing.

Kelly Criterion

The Kelly Criterion was originally developed by John Kelly in 1956 to assess long-distance telephone signal noise.

It now assists investors and bettors in determining the optimal diversification of a portfolio/bankroll by calculating the proportion of their money that they should allocate to every individual investment or bet.

This proportion is the ‘K%’ in the above formula. For example, in investing, if the K% is 0.125, then a portfolio should be 12.5% invested in each stock in the portfolio, effectively telling the investor how many positions to take.

Of course, if you have a negative winning probability, ‘W’, there is no optimal Kelly percentage.

As shown below, position sizing is incredibly important in both betting and investing.

If you have a bet with a 51% probability of winning and invest 5% of your money/bankroll each time, you will achieve a very different outcome to if you invest 10%.

Minor changes to the percentage invested will ultimately make the difference between success and ‘Gambler’s Ruin’.

The Kelly Criterion is the solution to gambler’s ruin, whereby bets/investments are determined as a proportion of bankroll rather than as fixed dollar amounts, such that a person bets/invests less as their bankroll falls and bets/invests more as their bankroll rises.

The Kelly Criterion has been used by some of the world’s most famous investors, including Warren Buffett and Mohnish Pabrai.

Bill Miller outperformed the market for 15 years at Legg Mason and has been a vocal proponent of Kelly. Ed Thorp, who returned 20% per annum for 30 years, said of the Kelly Criterion: “Success leaves clues.”

Thorp also pointed out that Warren Buffett’s investing is consistent with the Kelly Criterion: “He (Buffett) and his associate Charlie Munger, when managing $200m, put most of it into just five or so positions.

“Sometimes he was willing to bet 75% of his fortune on a single investment. Investing heavily in extremely favourable situations is characteristic of a Kelly bettor.”

Betting on tennis betting

As mentioned in our April newsletter, on 1 July, Waterhouse VC will make an investment in Tom Dry’s professional betting syndicate.

With a little help from the Kelly Criterion, Tom’s operational metrics are very impressive. Tom has developed a unique specialisation in tennis, which is much easier to leverage than multiple sports.

We believe that his edge in tennis betting would be difficult to replicate due to the quantity of proprietary historical data he possesses and the factors that he applies to his model.

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.

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 1,860% through to 31 March 2023.

In collaboration with iGaming NEXT, the April edition of Waterhouse VC looks at the complexity of professional punting and syndicate betting.

Are you feeling lucky?

David Walsh and Zeljko Ranogajec (business partners) are professional bettors, whose syndicate bets about $10bn per annum across horse racing, sports betting and lotteries, according to the AFR.

Walsh spent $75m to re-open Hobart’s Museum of Old and New Art (Mona) in 2011.

“Finding a system that works and is stable and works for a long time is extremely difficult. If you’ve had a system that works for 20 years, it’s not as a result of skill. You acquire the system that worked by luck, then once it worked, it might keep working.”

David Walsh

In our December newsletter, we discussed the niche but highly lucrative field of professional betting.

Betting successfully is incredibly challenging, with other market participants always trying to take your ‘edge’. This dynamic means that betting strategies must be adjusted all the time.

Rebating the competition away

The large betting syndicates receive generous rebates from pari-mutuel/tote betting for providing liquidity.

This gives them a significant edge (varies depending on pool/jurisdiction) over other participants.

To receive this rebate, bettors need to turnover vast sums of money. For example, US totes typically only offer rebates to bettors who wager over $5m per year (Sports Trading Network).

The largest pari-mutuel markets are in the US, Australia, Singapore, Japan, Hong Kong and France.

It is incredibly difficult for new entrants to compete with the handful that currently dominate because they are already behind.

The compounding of their rebate advantage has generated incredibly lucrative profits for the largest syndicates.

Data is competitive and costly

Alan Woods (deceased) and Bill Benter are other examples of successful professional bettors focused on racing.

Benter grew up in Pittsburgh and studied physics at university before taking on Las Vegas casinos at blackjack.

Woods grew up in Murwillumbah, a small Australian town. Woods was an actuary, who became a gambler with particular horse racing expertise.

After being banned from casinos, Woods and Benter partnered in 1984 to bet on horse racing in Hong Kong.

Their system developed an edge by betting on overlays but it was several years before they were generating significant profits.

In the first two years, they lost most of their $150,000 starting bankroll.

After a split from Woods, Benter started his own model using only 16 factors.

Over several years, the number of factors used in the model grew to over 100 and complex data began to play an increasingly important role.

Today, syndicates have large teams of statisticians and data analysts assessing 100s of unique factors.

For example, analysts of horse racing assess factors related to each horse, the racecourse, turf conditions, the trainer, the jockey and track configuration.

While the largest syndicates would win without the rebates from the totes, the rebates effectively provide further funding for their investments into data analysis capabilities, strengthening their competitive advantage.

This ‘rebate / data investment’ flywheel makes it extremely difficult for newcomers to break into professional betting.

Furthermore, in our discussions with professional betting syndicates, they told us that you usually need up to 5000 individual events to work out whether you have a real betting advantage that meets expectations, with lower advantages requiring more individual events.

For example, sports betting models require more events, given their typically lower advantages than horse racing models.

As Benter and Woods experienced early on in their racing betting, unfortunate luck in these first few thousand individual events easily bankrupts hopeful syndicates.

As shown by the deviations of the red line (cumulative result of actual dice rolls) above and below the blue line (expected value of dice rolls), it takes many events to determine the actual advantage (in this example, there are 6000 events and it is still unclear if there is an advantage).

Artificial Intelligence in betting

There has never been more data and technology applied to professional betting as there is today.

The increasing power and prevalence of artificial intelligence (AI) is the latest wave of technological disruption, which presents opportunities and threats to existing and emerging betting syndicates.

As discussed above, incumbent syndicates are best funded to further strengthen their dominance through investing in AI capabilities.

AI could improve the speed and efficiency of a syndicate’s automated betting processes, ultimately bringing down the cost of placing bets.

Consequently, the speed of bet placement is likely to become even more competitive.

From the bookmaker’s perspective, AI can identify new patterns and insights from betting data to ultimately make better predictions, adjust odds and minimise their losses to professional bettors.

For casual bettors, AI allows bookmakers to personalise each user’s experience according to their betting data.

In November last year, Walsh said that he was focusing his time on finding methods to protect his syndicate’s income from AI, with the belief that having data sets with unique observations could favourably impact his syndicate’s betting results.

Some of the world’s largest global investment firms are applying their expertise to professional betting.

For example, Susquehanna International Group (SIG) was founded in 1987 and has grown to around 2000 staff and $1bn of annual revenue primarily through trading in financial markets.

SIG established Dublin-based Nellie Analytics in 2017 to focus on sports betting.

In 2022, SIG took a 12.8% equity stake in PointsBet, which gave Nellie Analytics the opportunity to explore a partnership to provide sports analytics and quantitative modelling services to PointsBet.

Betting on tennis betting

Again in December, we discussed Tom Dry’s professional betting syndicate, which is focussed on tennis. Dry has been professionally betting on tennis since January 2020.

He has prior experience working for Tony Bloom (owner of Brighton Football Club), both as a data scientist and as a football analyst.

Through his experience working for Bloom, who is widely viewed as the world’s best football bettor, Dry developed both the analytical and operational skills required to build a professional betting business.

Dry’s operational metrics are very impressive and we believe that he has the ability to further scale the team, increase liquidity in tennis and also expand into other sports.

Despite the challenges of breaking into professional betting, Dry has built specialism in a unique sport, which is much easier to leverage than multiple sports.

We believe that Dry’s edge in tennis betting would be difficult to replicate due to the quantity of proprietary historical data he possesses and the proprietary factors that he applies to his model.

On 1 July 2023, Waterhouse VC will make an investment in the syndicate.

For bettors who are driven to put in the work and apply the latest innovations in technology, there are significant potential rewards.

After announcing its intention to list shares in the US, David Cook examines the logic behind a dual listing for FanDuel parent Flutter Entertainment.

“We believe an additional US listing of Flutter’s ordinary shares will yield a number of long-term strategic and capital market benefits. We look forward to continued engagement with investors and stakeholders on this matter and we will announce the results of this engagement in due course.”

There can be no doubting Flutter Entertainment’s ambitions at this time.

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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 1,847% through to 30 November 2022.

In collaboration with iGaming NEXT, the December edition of Waterhouse VC takes a deep dive into the “highly cash generative” world of professional betting:

Winning at wagering

Source: Pinnacle

In the first century, Pliny the Elder wrote: “We are so much at the mercy of chance that chance is our god.” 

Before the Renaissance, chance was associated with religion and fate rather than being a well studied area of science. During the Renaissance, mathematicians developed the field of probability, the foundation of risk management used by bookmakers and professional bettors.

Whilst professional betting is a rarely discussed and underinvested part of the wagering industry, it is hugely important and highly cash generative. 

The world’s largest betting syndicates wager billions of dollars each year by exploiting a unique ‘edge’ across sports and horse racing. Based on publicly available information, some of the largest professional bettors are detailed below: 

Tony Bloom (Starlizard)

Starlizard bets on many sports, with particular expertise in football/soccer. Bloom is the owner and chairman of Premier League football club, Brighton & Hove Albion, and is a majority owner of Belgian First Division A team, Royale Union Saint-Gilloise.

Matthew Benham (Smartodds)

Smartodds bets on many sports, whilst also selling statistical research and sports modelling to other professional bettors. Benham is the owner of English Premier League club, Brentford FC, and Denmark’s FC Midtjylland.

David Walsh and Zeljko Ranogajec

Walsh and Ranogajec developed a betting system focused on horse racing and other sports. Zeljko resides in the world’s most expensive apartment complex – One Hyde Park, London. Walsh spent $75 million to re-open the Museum of Old and New Art (MONA). 

Walsh was made an Officer of the Order of Australia (AO) for “distinguished service to the visual arts through the establishment of MONA, and as a supporter of cultural, charitable, sporting and education groups.”

Billy Walters

Walters is widely regarded as among the most successful sports bettors in Las Vegas. Walters had just one losing year over a period of 39 years. He is a well-known philanthropist and has donated to Opportunity Village, a Las Vegas nonprofit for people with intellectual disabilities.

Alan Woods

Woods focused on blackjack and horse racing and also worked with Zeljko for a period. With Bill Benter, he pioneered quantitative analysis in betting on horse racing in Hong Kong.

Bill Benter 

With a degree in Physics, Bill started off as a professional blackjack player in Las Vegas before meeting Alan Woods and building a large Hong Kong horse racing betting operation. Benter is known for his philanthropic activities and contributions to several political and charity groups.

Game, set, match

Most professional betting syndicates are relatively mature and are closed to external investment. Due to the natural compounding of betting capital, the only opportunity to invest in betting syndicates is generally towards their beginning.​ 

However, there are several emerging syndicates across both sports and horse racing. One such racing-focused syndicate is led by Dominic Catsaras and another syndicate focused on tennis is led by Tom Dry. 

Tom Dry has been professionally betting on tennis since January 2020. He has prior experience working for Tony Bloom (Starlizard), both as a football analyst and as a data scientist. 

Through his experience working for Tony Bloom, Tom developed both the analytical and operational skills required to build a professional betting business. 

Tom grew up in Portsmouth, UK, and is 28 years old. As a child he played, studied and followed almost every sport: football, cricket, tennis, athletics, F1, snooker, darts, etc.

This obsessive, historical, and first-hand knowledge of sport has given Tom a rare understanding of the ‘deep nature’ of different sports, which has subsequently proven to be highly lucrative.

Tom Dry. Source: European Gaming

Tom is a completely self-taught coder and statistician. Whilst at Starlizard, he built a snooker model in his spare time. 

Tom sourced and modelled ever more predictive proprietary data, culminating in a computer vision model which could extract the coordinates of the balls on the table and evaluate the difficulty of the position for the player.

Tom’s major focus at the moment is tennis, where he has developed a highly profitable model.

In the grand slams, and latter stages of the biggest tennis tournaments, where there is the greatest liquidity, Tom can bet much larger volume than he does currently, with minimal effect on price/return. By finding more high-level betting partners, he will be able to increase volumes across the board, from Grand Slams down to Challengers. 

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 1,851% through to 31 October 2022.

In collaboration with iGaming NEXT, the November edition of Waterhouse VC takes a deep dive into US market leader FanDuel:

Don’t count FanDuel out of iGaming

In October, the total iGaming revenue in North America was a record $446m (+26% year-on-year and +10% month-on-month).

iGaming is a significant growth opportunity for FanDuel. The company currently has 18% market share in iGaming, lagging third behind BetMGM and DraftKings, which have 29.8% and 22.8% market share respectively.

While FanDuel’s sportsbook is their primary customer acquisition channel, around 41% of sportsbook customers are cross-sold into iGaming within 30 days.

FanDuel is committed to improving its range of iGaming product offerings and developing effective promotion tools to retain and monetise players.

Total iGaming Revenue in North America. Source: Taylor Collison

Taking a large slice of a large pie

There are many views on the potential revenue of US online sports betting at maturity. BetMGM and DraftKings estimate it to be $14.1bn and $22bn respectively (Legal Sports Report), while FanDuel estimates it to be $22.6bn (Flutter Entertainment).

At the moment, FanDuel has 42% market share and expects to generate around $2bn of sportsbook revenue this year. If the potential revenue opportunity is $19.5bn (taking the average of the three operators’ estimates) and FanDuel’s market share falls to 30%, FanDuel’s implied online sports betting revenue at maturity is $5.9bn, which is around 3x higher than this year.

If FanDuel’s market share remains at 42%, revenue would be around 4x higher.

Flutter’s Australian brand Sportsbet has an EBITDA margin of 34%. Flutter aims for FanDuel to achieve long-term EBITDA margins comparable to their other divisions (including Sportsbet).

If FanDuel achieves a mature EBITDA margin of 25%, the sportsbook business alone could generate higher EBITDA than Flutter’s entire business generated in 2021. This excludes any contribution from iGaming.

FanDuel’s target long-term key operating metrics. Source: Flutter Entertainment Plc

Waterhouse VC has been invested in Flutter since September 2019. While its initial investment has appreciated 70% over the past three years, it remains particularly optimistic about the growth profile of the company’s US operations.

ASX-listed betting supplier BetMakers has agreed to acquire ABettorEdge Pty Ltd, trading as Punting Form, in a deal worth up to A$20m.

Punting Form uses proprietary IP and artificial intelligence to create sectional times and benchmarks for horse racing, which are used to create time-based rating systems.

Sectional times are the times taken for each horse to complete a section of a race, usually a furlong. Punting Form is currently used by professional betting syndicates, betting operators, content creators and form analysts globally, BetMakers said.

The supplier’s products form an integral part of data requirements for professional horse racing participants, it added.

BetMakers intends to use the sectional times in conjunction with its own technology to deliver enhanced features such as more accurate pricing, speed maps, runner comments and integrity benchmarking.

The firm said it will integrate Punting Form services and data across all of its operating divisions with an immediate focus on its Managed Trading Services division, to allow for pricing improvements across its ratings engine.

Punting Form will also expand its current services to include sectional time ratings for horse racing in North America and other global jurisdictions including New Zealand, the UK and Ireland, as well as adding other racing formats such as greyhound and harness racing.

BetMakers CEO Todd Buckingham: “The synergies across our business are exceptional with both internal use and our external client base benefiting greatly from this acquisition. The team at Punting Form are very experienced in delivering B2B wagering solutions and we are excited to have them onboard at BetMakers.”

BetMakers said the acquisition is strategically important across several of its business segments. In addition to improving the back-end tools, pricing and trading margins associated with its Global Betting Services, it will also drive more liquidity in its Global Tote offerings, it said.

The deal will also improve pricing and confidence in overseas content through BetMaker’s Global Racing Network and will ensure BetMakers’ proprietary ratings engine is powered with the best available data for US fixed-odds racing, facilitating a shift for tote operators to move into fixed-odds wagering, according to the supplier.

Upon completion, which is expected by the end of 2022, BetMakers will pay an initial consideration of A$3m in cash to Punting Form’s current owners, Hong Kong-based JJ Ventures Ltd and Hkelly Holdings Ltd.

A further A$3m will be payable upon the successful rollout of Punting Form technology to the US market, for a total of A$6m payable in the first year of the deal.

The remaining A$14m can be earned by Punting Form’s sellers depending on the delivery of incremental revenues and profits, with $5m to be paid at the end of years one and three and A$4m payable in year two.

After the initial A$3m cash consideration, all subsequent payments may be made in cash or BetMakers stock at BetMakers’ discretion.

“Sectional Times are at the forefront of any ratings system and required by any serious ratings engine,” said BetMakers CEO Todd Buckingham.

“The synergies across our business are exceptional with both internal use and our external client base benefiting greatly from this acquisition. The team at Punting Form are very experienced in delivering B2B wagering solutions and we are excited to have them onboard at BetMakers.”

BetMakers’ share price tumbled on Friday (21 October) after B2B gambling industry venture capital firm Waterhouse VC offloaded some 10 million shares in the business, generating around A$11.4m in the process, according to The Motley Fool.

Shares in the firm are currently down some 60% in 2022 to-date.

iGaming NEXT editor Conor Mulheir sits down with betting industry royalty Tom Waterhouse, chief investment officer of Waterhouse VC, to discuss all things investment in 2022.


As I approach Mayfair, an uncommon quiet hangs in the district. While London bakes in the middle of a summer heatwave, throngs of businesspeople have fled the area to take a break from the oppressive heat.

The few who remain are heading out for lunch with their collars unbuttoned and sleeves rolled high. One man, however, eschews the informal approach and emerges with a broad smile while dressed in his signature full suit and tie.

As CIO of the VC fund he founded in 2019, Australian-born Tom Waterhouse is used to keeping his cool – both in the extreme Antipodean weather, and in the often-turbulent world of finance.

Waterhouse sat down with iGaming NEXT to discuss the reality of navigating a VC fund through a volatile macroeconomic environment.

Conor Mulheir: There is a lot of talk around the current macroeconomic environment and doom and gloom for the economy. What has changed over the last few years, and how has this impacted gaming investments?

Tom Waterhouse: Well, up until October last year, you had a whole bunch of tailwinds for the gaming industry. You had the US opening up with the repeal of PASPA in 2018, and then you had each state opening up for sports betting, and sometimes for iGaming.

You had that, coupled with the fact that money was effectively free, with interest rates around 0% globally. Basically, people were trying to find a home for the cash, and one of the fastest growing areas was US sports betting and anything linked to that.

Then, everything changed. There were signals that there was going to be a significant tightening and inflation was no longer deemed to be transitory. This was magnified by the supply pressures caused by the war in Ukraine. As a result, interest rates have been hiked globally and quantitative easing has been curbed – money is simply far more expensive today than just six months ago.

This increased cost of money has negatively impacted business valuations, particularly for high growth businesses, which are more sensitive to changes in the cost of money. The valuations of some operators have fallen 70% to 80% from their highs. Considering the current lower valuations of high growth operators, raising more money today would be highly dilutive for existing shareholders. 

Multiple operators have also rapidly reduced their marketing activities, with a stronger focus on profitability. 

CM: What impact has the economic downturn had on VC funds?

TW: For us as a VC, even though we focus on B2B and not B2C, we’ve seen a very similar change in valuations – from over 10x multiples of revenue – to now seeing a lot of businesses valued at 1x or even sub-1x revenue.

That’s because the ability to raise money in this market is much, much harder, and they obviously need cash to survive. Most people are saying that now is the time to be very wary because of things like a possible recession, increasing interest rates and inflation. People want to conserve cash. 

It’s a very interesting and exciting time for us as a fund, because we’re still seeing businesses that we thought were terrific businesses with huge upside, but we’re able to go into them at a fraction of the valuation compared to six months ago. We feel fortunate for the timing that we’re able to find and see these opportunities in the market. 

CM: What kind of businesses does Waterhouse VC typically look to invest in?

TW: Our focus is on technology primarily because of my past experience as an operator and CEO of William Hill Australia. I have realised that there are hundreds of technology services in the product pipeline for B2C operators. We want to invest in businesses that are good enough to get onto that product pipeline and provide them with the capital required to get integrated. 

For example, maybe three years from now in the US, everyone will be making voice bets, or text bets, or doing it through their Twitter account or their Instagram account. That is very interesting, because it would completely disrupt the game. Unique pieces of technology are critical to the success of operators, and hopefully we are able to leverage our expertise to find those unique pieces and invest in them early enough.

CM: What specific areas of technology are you focused on at the moment?

TW: In terms of the customer experience, we want to be looking at voice and text companies, similar to Siri and Alexa, but applied to the betting industry. You’ve seen Google shift from drop down to voice and text – and we cannot see why this wouldn’t happen in the betting industry.

We also want to focus on the affiliate and marketing side, because we see that cost-per-acquisition is so high. We also want to focus on areas that supply extra product, such as horse racing, into the US market – because NFL, NBA and baseball are low margin products, and have gaps in between seasons. 

Whether it’s iGaming, fixed-odds horse racing or esports, we want to be across those areas. We also see a gap in the market with exchange betting – there’s still no clear winner in US exchange betting, so we’re focused on exchange providers. 

CM: When businesses come across your desk for consideration, how do you decide where best to allocate your capital?

TW: First, we have to be going in at an attractive initial valuation, such as the same valuation as the last money raised. They also have to be generating revenue – we tend to avoid pre-revenue opportunities because we like to see a strong proof of concept and some indication of unit economics. However, we actually spend most of our time assessing the underlying technology of the business through our in-house technology team.

We speak to other businesses in the space to assess the entire competitive landscape and ask: Who else is doing what they’re doing? What are they like? Why are they not better than this other company? What is unique about this company? 

We then speak to the customers they supply their service to and ask questions like: How are they going? What’s the uptime like? How easy is it to integrate? How quick is it for them to respond? 

We meet the team and ask: What do they uniquely build? What’s the skill set of the team? Why have they got a unique insight to this piece of technology? What contracts have they got that can’t be replaced? 

If, after all those questions are sufficiently answered and we think there’s a need for the product from the operators, then we look to proceed with an investment.

CM: With plenty of opportunities left to explore, it sounds like it might not be all doom and gloom for iGaming investors after all! Thanks again for joining me. 

Sports betting exchange BetConnect has secured a round of pre-Series A funding from a consortium of iGaming industry investors, including former FOX Bet CEO Robin Chhabra, who has also joined the start-up as a strategic business adviser.

The round’s other investors include Tom Waterhouse, Andy Clerkson and Tim Heath.

Waterhouse is an Australian wagering specialist who serves as chief investment officer at Waterhouse VC. He served as the CEO of William Hill Australia between 2014 and 2018 and also runs a high roller affiliate tipster business via TomWaterhouse.com

Clerkson is the founder of the Grand Parade digital creative studio and former chairman to free-to-play specialist SportCaller, while former Coingaming Group (now Yolo Group) CEO Heath has invested in BetConnect via his Yolo Investments fund. 

BetConnect said the funding has been raised in addition to further re-investment from Candy Ventures, a multi-stage investment firm that has been involved in every capital raise so far. 

Candy Ventures is based in Luxembourg and is bankrolled by British entrepreneur Nick Candy. The firm has funded 25 companies to date in sectors including fintech, biotech, augmented reality and sports. 

The new financing will be used to accelerate the brand’s growth in the UK and internationally and to support its product roadmap over the next 12 months.

BetConnect said the senior appointment of Tekkorp Digital Acquisition Corp president Chhabra, who has a proven record of scaling businesses and leading major M&A deals, underscores the company’s ambitious vision for the future.

Chhabra said: “BetConnect has a genuinely innovative product that has been stress-tested in the UK’s ultra-competitive marketplace. Dan [Schreiber] and his team offer a transformative vision and a super-agile platform, which, combined with their ability to execute, sets BetConnect up for international expansion. 

“For me, this investment constitutes an exciting strategic play in a company that has already laid the firm foundations to strike once exchange regulations do clearly coalesce across US states.”

BetConnect founder Schreiber added: “BetConnect’s growth over the last three years has been incredible and to have secured investment from such prominent industry leaders will accelerate this growth to the next level.

“This funding gives us the opportunity to develop new products and services to complement the core offering, keeping them all accessible and intuitive to the evolving demands of the end user. It also allows us to focus on a community-first approach which ensures that new developments will resonate with our users.”

The BetConnect platform enables users to access odds from all major operators in one place. Users can then place their bets through a single account on the platform, without needing to sign up for multiple accounts with different licensed bookmakers.

At present, BetConnect’s 20,000+ users can both back and lay bets on sports including horseracing, football, golf, tennis and cricket.

“BetConnect is at the forefront of a betting revolution that’s sweeping the industry,” said Waterhouse. “The Waterhouse VC Fund endeavours to generate capital growth by holding long-term strategic investments in companies that can reinvigorate tired thinking and disrupt the norm.

“The BetConnect model improves the experience for international customers and can be flexibly adapted to accommodate blockchain assets and the inherent crypto benefits of better margins, lower transaction costs and faster withdrawals,” he added.