Waterhouse VC is a fund that specialises in global publicly listed and private businesses related to wagering and gaming sectors. The fund is only available to wholesale investors.

Since inception in August 2019, Waterhouse VC has achieved a gross total return of +3,408% (annualised at 96%), as at 30 November 2024, assuming the reinvestment of all distributions.

Nigel Eccles: From FanDuel to BetHog

With crypto markets resurging and the Trump administration signalling a crypto-friendly regulatory stance, this month’s edition builds on our feature of Polymarket, where we explored how blockchain and crypto are unlocking new opportunities in wagering. This month, we spotlight FanDuel founder Nigel Eccles, who has been at the forefront of innovation in the sector - spanning betting exchanges, prediction markets, fantasy sports and now crypto wagering.

Betting Foundations

Eccles grew up on a dairy farm in Northern Ireland, but farming was never a career aspiration. Instead, he pursued mathematics at St Andrews University in Scotland, graduating with a first-class degree and honing an interest in probability and game theory - principles that underpin nearly every aspect of the wagering industry.

His betting career began in 2000 at Flutter.com, joining the product team of what was originally conceived as the ‘eBay of sports betting’. The advent of the internet had enabled peer-to-peer betting, but Betfair, also launched in 2000, delivered the standout product. Eccles was tasked with the ambitious role of ‘destroying Betfair’ and while Flutter.com gained some market share, it ultimately merged with Betfair in 2001, laying the foundation of what would later become Flutter Entertainment.

At the time, betting exchanges were the disruptors of traditional wagering operators, introducing now-standard features such as trading, hedging and in-play betting. Following the merger, Eccles joined another exchange in Betdaq to help relaunch their platform. However, as discussed in last month’s edition, liquidity is critical for exchanges, and Betfair’s dominance made it difficult for challengers to compete. Facing limited opportunities for further innovation, Eccles stepped away from the wagering industry.

FanDuel Fantasy

After a 3-year stint in consultancy, and a brief spell in the newspaper industry, Eccles returned to wagering, this time focussed on creating engaging, user-centred products. In 2007, Eccles teamed up with his wife, Lesley, whom he met at St Andrews, along with Rob Jones and Tom Griffiths, to launch HubDub, a play-money prediction market based in Edinburgh.

*Nigel and Lesley Eccles in the FanDuel offices. Source: Medium*

HubDub gained traction during the 2008 Obama election, appealing to a U.S. audience but engagement declined post-election. This led Eccles to pivot toward fantasy sports where they saw an opportunity for disruption. In July 2009, FanDuel was born.

Fantasy sports has long-been ingrained in American sports culture, particularly in the absence of legalised sports betting. Eccles and his team reimagined the experience by making it faster, mobile-friendly and more engaging. Interestingly, none of the founding team had played fantasy sports before, which gave them a fresh perspective to tackle the traditional models’ shortcomings.

Rather than having season-long commitments which was the traditional model for fantasy sports, FanDuel introduced single-day prize contests, allowing users to enjoy instant results, large prize-pools and regular payouts without waiting until a season concluded.

The domain was reportedly purchased for just $15, and while the mid-season July launch did not yield immediate success, the next season saw FanDuel begin to make its mark. Despite Edinburgh headquarters, FanDuel quickly became a household name in the U.S., growing 3-5x every year from 2009 to 2015, and reaching an estimated $150M in revenue by 2015, and paying out $2B in prize money.

Despite regulatory challenges along the way, Eccles saw legalised sports betting in the U.S with a degree of inevitability. By 2018, when PASPA was repealed, FanDuel was perfectly positioned with a 40% market share in fantasy sports, a loyal customer base and a well-established brand. These factors culminated in Flutter Entertainment’s $4.2B acquisition of FanDuel, the group’s largest deal to date. Today, FanDuel boasts 18M+ customers, with its market opportunity projected to reach $70B by 2030.

The acquisition however left a bitter taste. Eccles and the founding team had all left the business by that point, and private equity ownership wiped out common shares, ensuring the $4.2B did not benefit those who built the business. There remains an ongoing legal dispute on the sale, with Eccles and other co-founders seeking redress.

Eccles stepped away from FanDuel in 2017, with a desire to return to his passion of early-stage startups. Since leaving, he has co-founded five consumer-focused businesses, including a sports card trading marketplace, StarStock, which brought a growing interest in meme-coins, NFTs and crypto, all of which he takes seriously. Now, Eccles is driving the convergence of wagering and crypto through ventures like BetDEX and BetHog.

BetDEX: A decentralised betting exchange

In the two decades since Eccles first worked in betting exchanges, the space has seen little meaningful innovation. While Betfair remains dominant, its liquidity has suffered due to rising taxation and failure to capture the attention of new audiences, leaving the space ripe for disruption.

Recognising blockchain’s potential to address these challenges, Eccles co-founded BetDEX in 2021 with former FanDuel colleagues Varun Sudhakar and Stuart Tonner. Built on the Solana blockchain, the decentralised exchange was designed to provide high-speed, low-cost verifiable transactions, creating an attractive proposition for bettors, encouraging a global audience and in turn, improved liquidity.

Like Polymarket, users wager using the USDC stablecoin, meaning there are no transaction fees, chargebacks or taxes that burden traditional fiat platforms. These cost savings are then passed on to users in the form of lower commissions, making BetDEX a competitive proposition. What is impressive is how the team leverages the payments innovation of crypto to address these issues. As a decentralised platform governed by smart contracts, there is no need for intermediaries and the platform can thrive without the same regulatory scrutiny.

BetDEX represents a significant leap forward for the betting exchange model, leveraging the power of blockchain to solve long-standing inefficiencies. Today, Eccles serves as Chairman of the business.

*BetDEX interface brings a new look to exchange betting. Source: Caanberry*

Bringing Home the Bacon

Eccles’ latest venture, BetHog, was launched with FanDuel co-founder Rob Jones at the start of this year, and recently secured a $6M funding round. Describing itself as a “nakedly degen crypto casino and sportsbook,” BetHog is designed for a younger, crypto-savvy audience, and features innovations that once again shows Eccles’ drive for disruption and passion for creating user-driven products, this time focussed on fun.

In our August Newsletter, we explored the success of crypto casinos and the advantages that cryptocurrency brings through reduced operational expenses. The result is flexibility to increase player bonuses, offer better promotions, and enhance the user experience. BetHog goes further by disrupting traditional casino games, introducing skill-based elements to slot games, which have traditionally focused on luck. As Eccles views it, there is nothing cool about being great at slot games.

Live streaming has become a hallmark of successful crypto casinos like Stake, where users tune in to watch personalities play familiar games. They are an unbelievably successful acquisition tool but the games have seen little innovation over the last 20 years. This is where BetHog wishes to innovate, creating beatable games where skill and chance coexist.

The BetHog team has developed peer-to-peer games allowing friends to engage in gameplay together so that users can interact with streamers, allowing users to bet alongside them and even against them. With this, you can emulate the social experience of offline betting. They have also built HODL (hold on for dear life) games allowing users to speculate on the price action of meme coins - merging crypto trading and casino entertainment is a unique and innovative blend.

*Memecoin price action prediction games on BetHog called HODL. Source: BetHog*

Community and Crypto Innovation

Eccles’ experience building communities through fantasy sports shapes his vision for BetHog. While FanDuel excelled at community-building, he believes adding a sense of ownership can elevate the user experience. Platforms like Rollbit and Shuffle have demonstrated how tokens can foster community and collective ownership, a feature increasingly integral to crypto casinos. Eccles sees tokens—and even memecoins—not only as a source of amusement and fun but as powerful tools for engagement and ownership in gaming, where the potential for unbounded returns cannot be dismissed.

Key Takeaways:

Differentiate: In a competitive industry, the true winners offer something unique. Eccles’ journey exemplifies this, consistently solving genuine problems and developing standout products.

Focus on intended audience: The success of platforms like Polymarket, BetDEX, and BetHog lies in their ability to engage with their intended audiences. Polymarket broke down crypto barriers for many, BetDEX is designed to solve the shortfalls of traditional exchanges for more serious bettors. BetHog appeals to those looking for a fun betting experience.

Learn from Experience: Not every venture will succeed, but each experience offers valuable lessons.

Follow the Trends: Eccles’ focus is clear: create great products that capture growing trends.

Media

Waterhouse VC hosted a webinar about the crypto casino industry with Ishan Haque from Shuffle, one of the leading companies in the space. Ishan spoke about the early days of the business and explained how crypto casino operators are setting the benchmark for user experience.

Watch a discussion about Tabcorp's recent workforce reduction as a response to increased regulatory and tax pressures, highlighting competition from global operators like Flutter and Entain.

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.

All the best,

Tom

DISCLAIMER AND IMPORTANT NOTES

Please note the above information in relation to Polymarket, Nigel Eccles, Betdaq, FanDuel, Flutter Entertainment Plc, Betfair, HubDub, eBay, Medium, Varun Sudhakar, Stuart Tonner, Stake, Shuffle, Rollbit, Caanberry, Rob Griffiths, Rob Jones, Lesley Eccles, BetDEX is based on publicly available information and should not be considered nor construed as financial product advice. The fund currently has a position in Flutter Entertainment Plc. The information provided in this document is general information only and does not constitute investment or other advice. Readers should consult and rely on professional investment advice specific to their individual circumstances.

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