Waterhouse VC January update: Crypto can help to develop a new breed of wagering platform

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 1,837% through to 31 December 2022.

In collaboration with iGaming NEXT, the January edition of Waterhouse VC takes a deep dive into crypto wagering:

Crypto wagering

In May, we discussed the significant opportunity in crypto wagering, which is currently growing gross gaming revenue (GGR) at 36.6% per annum according to iGaming solutions supplier SOFTSWISS.

Online crypto operators, such as Stake.com and Sportsbet.io, have a similar user experience to online fiat operators, and are already recording extraordinary turnover.

White label platform solutions for crypto operators are leveraged to the growth of crypto wagering as a whole, rather than being exposed to the operational and regulatory risk of a single crypto wagering business.

Source: SOFTSWISS

Existing wagering platforms

Many fiat operators rely on white label sportsbook and iGaming platform solutions, such as Kambi, OpenBet and SBTech.

However, our research concludes that many existing platform solutions have been built without all core internal needs across marketing, trading, operations, customer service and compliance.

Some do not have customisation and changes typically require further costly development. The customer profiling and risk configurations result in suboptimal customer experiences for highly profitable customers and deeper losses to negative value customers.

Some platforms are unable to keep up with customer demands or provide segmented customer experience. All of the above existing platforms were founded over 12 years ago and some continue to rely on legacy technology.

Technical debt compounds over time and is a key challenge for platforms, as well as technology companies more broadly.

Future of wagering platforms

There is a significant opportunity to develop a new breed of wagering platform that combines racing, sports and gaming with both crypto and fiat payment capabilities. Key core platform capabilities are summarised below.

We are seeing opportunities emerging to invest in the next generation of wagering platforms, leveraging new technology and embedding modern third party integrations.

These platforms will integrate crypto at the technology layer rather than as an afterthought. Considering the continued growth of crypto wagering globally, as well as all online wagering in the US, we are very excited by the possible opportunities.

A key element of our approach will be to identify management teams that have significant experience in the direct build and operation of successful platforms in competitive markets.

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.