As the dust settles on the U.S. election, prediction markets have captured attention far beyond traditional wagering circles. Polymarket handled over $3.6 billion on wagers on the election outcome, accurately predicting not only the President but also the results in every swing state. Historically, many exchanges have struggled to sustain activity beyond major headline events, limiting their capacity to provide consistently actionable insights. Today, a new wave of platforms are looking to overcome these challenges.
In the world of wagering, few names carry as much weight as Flutter Entertainment. Before Flutter, there was Paddy Power. Under Patrick Kennedy, Paddy Power became a major player in global wagering. A pivotal move was the acquisition of Australian operator Sportsbet, which set the blueprint for future international success. In 2016, Breon Corcoran led a £5.7B merger, creating Paddy Power Betfair, which laid the foundation for Flutter’s future dominance. In 2018, Peter Jackson took over as CEO, with the 2019 rebrand to Flutter Entertainment signalling ambitions far beyond a name change. Today, the ‘Flutter Edge’ - a combination of scale, product, technology, and expertise - continues to position the company as the dominant force in global wagering.
Data hasn't always been as central to sport and wagering as it is today. Michael Lewis’s book Moneyball, popularised data’s role in sport. As the internet grew, companies like Sportradar and Genius Sports emerged. Today, data companies drive everything from broadcasts and advertising to fantasy sports, wagering and league operations. AI and machine learning continue to unlock new opportunities for fan engagement, especially in the wagering industry. Racing & Sports, with whom Waterhouse VC has entered into a strategic partnership, is now poised to lead the transformation of racing.
Becoming the dominant force early in an industry can lead to significant competitive advantages, brand recognition, and customer loyalty. In the UK, Ladbrokes and William Hill emerged as the market leaders amongst a wide field of operators. By 1999, at the dawn of the internet era, there were 8,500 UK betting shops. The internet changed the way people ‘shop’ for bets, leading to a steady decline in high street betting shops. In their place, technology-lead operators like Flutter and Bet365 emerged.
The fund started on 19 August 2019 and is approaching its 5 year anniversary. The fund returned +53.3% for the 2024 financial year and generated a positive return in 8 of the last 12 months. Two businesses in particular, Project Tennis and Saintly, contributed significantly to the fund's performance. As the fund matures, deal flow has accelerated, particularly in professional betting syndicates.
The first live casinos were launched in the mid-2000s, with the segment growing rapidly after the introduction of smartphones and technological advances in streaming and text/voice chat functionality. The global live casino segment continues to grow rapidly at +31% per annum. We believe that live casino will remain one of the fastest growing segments of gaming and wagering as technology and the quality of the player experience continue to advance.
Online crypto operators, which have a similar UX to online fiat operators like FanDuel and DraftKings, are already recording extraordinary turnover. In Q3 of 2021, the total number of bets placed using cryptocurrency increased by 181% yoy, while the share of bets in crypto (43.3%) is fast approaching par with fiat (Softswiss).
Long before any industries were well-regulated, wagering flourished and was even documented in religious texts. Dice and other gaming pieces have been found in Egyptian tombs dating back to 2000 BC. Structured, regulated casino wagering began in Europe in the 17th century, with sports betting following in the late 18th century.
The chances are that you, or a younger relative, have already engaged with Esports. The player bases, viewership and prize-pools of Esports are now comparable with traditional sports. In the US, Esports wagering is already allowed in Nevada, New Jersey, Colorado, and West Virginia, and soon to be allowed in a further 11 states.
The Waterhouse VC Fund’s investment in Playtech has come to a bittersweet end, with a takeover offer from Aristocrat Leisure pending shareholder approval. We were excited to be shareholders as they executed on their opportunities for growth in the US, but the fund will now crystallise a gain of 190% on the investment.
