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 +3,044% (annualised at 98%), as at 31 August 2024, assuming the reinvestment of all distributions.

RAS & WVC
We were excited to announce our new deal with Racing and Sports (ASX:RTH) on 14/08/2024. In this month's edition we lay out the role of data in the industry, why it is important and how it has evolved.

Raw materials

Eighteen years ago, mathematician Clive Humby coined the phrase ‘data is the new oil’, underscoring the vital role data would play in driving business and innovation. If not as scarce, high-quality data is just as valuable for sports and wagering. Access depends on securing rights, with rising costs creating natural barriers to entry. AI and machine learning is now being applied to premium sports data to unlock new opportunities for fan engagement, especially in the wagering industry.

Horse whispers

Data hasn’t always been as central to sport and wagering as it is today. Before televisions, attending a sporting event was the only way of knowing what really happened. Radio helped, but listeners were still reliant on the commentator’s account. In betting shops, trying to gauge how your bet was faring over shouting and excitement would have been a real challenge.

*Dorothy Paget with her 5x Cheltenham Gold Cup Winner, Golden Miller. She used to famously place her bets the day after the race was run. Source: The Telegraph.*

Hot models

Before the internet and data companies, betting used to rely largely on being ‘in the know’. For example, ‘gallop watchers’ might have had knowledge about a horse that even bookmakers didn’t possess, allowing them to place bets at superior odds before the information spread. Today, social media has turned whispers into instant news, and data access through the internet has transformed wagering into a more analytical endeavour. The world's top betting syndicates now rely on finely tuned models which are driven by high-quality data to find their edge.

Moneyball

It was Michael Lewis’s bestselling book Moneyball, later adapted into a film featuring Brad Pitt and Jonah Hill, that popularised data’s role in sport. The remarkable 2002 season of the Oakland Athletics showed how data could revolutionise scouting and team management, and hinted at its potential to influence wagering. By quantifying game events, statistics became invaluable for creating pre-match markets. With the continuous improvement of technology, in-play betting emerged, where real-time information drives odds adjustments almost instantaneously. This mathematical approach to running football teams and betting has been implemented by Tony Bloom, owner of Brighton and Starlizard as well as Matthew Benham, owner of Brentford and Smartodds.

As the internet grew, companies like Sportradar and Genius Sports emerged. Initially focussed on serving the wagering market through an odds aggregation tool, their role expanded to monitoring the integrity of sport through tracking suspicious betting patterns. Today, data companies drive everything from broadcasts and advertising to fantasy sports, wagering and league operations.

On the radar

Sportradar now has established partnerships with the NBA, UEFA, ATP Tour and MLB, giving fans access to detailed stats on every team and player. Using AI computer vision and in-venue scout coverage, they continue to redefine the fan experience. For teams, Sportradar provides advanced analytics through machine learning which helps with team selection, scouting and tactical decisions.

*Michael Jordan, a large shareholder of Sportradar with CEO Carsten Koerl: Source: GlobeNewswire.*

Through their partnership with the NBA, fans can purchase a League Pass, which allows fans to stream games and bet live, with prices updating automatically through Sportradar’s data. This automation eliminates the need for operators to run trading teams to manage their risk, significantly reducing their costs. In 2023, Sportsradar’s revenue totaled €877.6 million, of which €649 million was generated from betting related services, whether that be from content, odds feeds or full-suite managed trading services (MTS). Other revenue streams include advertising and broadcast enhancement as well as integrity services for sports leagues.

High IQ

With partnerships with the EPL, EFL, FIBA and NFL, Genius Sports is changing the game for how fans consume and engage with sports. Their ‘BetVision’ product for the NFL also capitalises on the rapid growth of sports betting in the US, with fans able to stream and bet in-play which is a high margin product for bookmakers. For 2023, 76% of total betting volume from streamers was from in-play betting during the NFL season.

*Genius Sports graphics being showcased in ESPN coverage. Source: ESPN Basketball.*

Genius Sports is also working with respective leagues to improve the game itself. At Premier League grounds for example, the introduction of offside tracking powered by computer vision cameras will reduce game delays and the burden of big decisions for referees. The Premier League data zone showcases some of the capabilities which Genius can deliver to engage fans. In 2023, Genius generated US$413 million in revenue and they have just launched Genius IQ, offering unparalleled game analysis, performance insights and sportsbook optimisation for in-play betting.

Genius Sports and Sportradar cover some of the most-watched and bet-on sports leagues in the world, and as such, the distribution rights are costly, running into the hundreds of millions of dollars. However, the growth of global sports betting, especially in emerging markets, enables both companies to leverage technology to deliver significant returns on these investments.

Racing’s Moment

Racing has historically been behind the curve when it comes to fan engagement, particularly when compared to global sport franchises like the Premier League and Formula 1. This is an issue because racing’s audience is ageing, a trend that threatens the sport’s long term sustainability. To attract a younger, global audience, racing must follow the lead of innovators like Genius Sports and Sportradar who have shown that data is the lifeblood to any sport.

RAS Technology Holdings (ASX:RTH), with whom Waterhouse VC has just entered into a strategic partnership, is poised to lead this transformation.

RAS Technology Holdings, better known as “Racing and Sports", is a global leader in data, analytics and technology for the racing and wagering industry. Founded 25 years ago, they now possess one of the most comprehensive global racing databases, covering over 33 jurisdictions and extending to greyhound and harness racing.

Racing is a complex sport, often producing more questions than answers which can overwhelm newcomers. However, the solution lies in providing fans with digestible, actionable information about racing that demystifies the sport and makes it engaging. Racing and Sports is uniquely positioned to fill this void. RAS offers fans access to detailed race overviews, runner comments, speed maps, tips, proprietary ratings, and sibling reports for global racing.

With over 25 years of data, RAS is now showcasing the value of their data to operators, fans, racing bodies, trainers, and bloodstock agents. Since listing in 2021, RAS’s annual revenue has grown from A$5.3 million to A$16.2 million, driven by effective distribution capabilities and partnerships that recognise the immense value of their offerings. For operators, racing has always been a high-margin product and unlike any other sport, it runs 24/7, but to maintain and grow this profitability, it’s essential that punters feel informed enough to engage with the sport.

What sets RAS apart from their competitors, is their ability to innovate on their data to cater to various audiences. This is critical for driving engagement. Their data and content solution is utilised by all tier-1 Australian operators making racing an exciting product to wager on. For instance, they have recently developed an AI race predictor which is using predictive modelling to generate selections.

Staking

The recently launched partnership with online crypto operator Stake.com (discussed in our August newsletter) where RAS has built a complete racing solution, coupled with a surge of interest from crypto operators seeking new products, positions racing to re-engage with a younger, more global demographic. RAS also offers a managed trading service, allowing operators to leave the risk management to their highly sophisticated, AI driven, automated trading platform, which provides rapid trading decisions, making it easier for emerging operators to succeed.

RAS has a critical role to engage racing fans and attract new audiences. Increased interest naturally leads to ownership opportunities, and as the sport becomes better funded through operator contributions, the prize money can make it an even more attractive proposition and help secure the sport’s future through genuine long-term interest.

Media

For those that missed our September webinar, catch up on the recording here. Tune in for review of the fund's five-year track record, recent option deals added to the portfolio, and the current opportunities we’re seeing in the wagering industry.

Learn more about Waterhouse VC’s strategic investment in Racing and Sports in this interview with Ausbiz.

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 Genius Sports, Sportradar, Stake.com, Brighton and Hove Albion, Starlizard, Tony Bloom, Matthew Benham, Smartodds, Brentford FC,and RAS Technology Holdings is based on publicly available information in relation to the company and should not be considered nor construed as financial product advice. The Fund currently has a position in RAS Technology Holdings. 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.

Not for Release or Distribution in the United States of America

This material may not be released or distributed in the United States. This material does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States or any other jurisdiction in which such an offer would be illegal. The units in the Fund have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the U.S. Securities Act) or the securities laws of any state or other jurisdiction of the United States. Accordingly, the units in the Fund may not be offered or sold in the United States unless they are offered and sold, directly or indirectly, in transactions exempt from, or not subject to, the registration requirements of the U.S. Securities Act and any other applicable United States state securities laws.

General Information Only

This material is for general information only and is not an offer for the purchase or sale of any financial product or service. The material has been prepared for investors who qualify as wholesale clients under sections 761G of the Corporations Act or to any other person who is not required to be given a regulated disclosure document under the Corporations Act. The material is not intended to provide you with financial or tax advice and does not take into account your objectives, financial situation or needs. Although we believe that the material is correct, no warranty of accuracy, reliability or completeness is given, except for liability under statute which cannot be excluded. Please note that past performance may not be indicative of future performance and that no guarantee of performance, the return of capital or a particular rate of return is given by Sandford Capital, Waterhouse VC or any other person. To the maximum extent possible, Sandford Capital, Waterhouse VC or any other person do not accept any liability for any statement in this material.

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Waterhouse VC is an Australian Unit Trust denominated in AUD and available to wholesale institutional investors worldwide with a minimum of AUD 500,000 or USD / EUR / GBP / JPY / CHF equivalent. This material has been prepared by Waterhouse VC Pty Ltd (ABN 48 635 494 861) (‘Waterhouse VC’, ‘Trustee’, ‘us’ or ‘we’) as the Trustee of the Waterhouse VC Fund (the ‘Fund’). The Trustee is a corporate authorised representative (CAR 1278656) of Sandford Capital Pty Limited (ABN 82 600 590 887) (AFSL 461981) (Sandford Capital) and appoints Sandford Capital as its AFS licensed intermediary under s911A(2)(b) of the Corporations Act 2001 (Cth) to arrange for the offer to issue, vary or dispose of units in the Fund.

Performance

Past performance of Waterhouse VC is not a reliable indicator of future performance. We make every endeavour to ensure results are accurate. Waterhouse VC Pty Ltd does not guarantee the performance of any strategy or the return of an investor’s capital or any specific rate of return. No allowance has been made for taxation, where applicable. We encourage you to think of investing as a long-term pursuit. Waterhouse VC’s results are indicative only and subject to subsequent year end external financial review.

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