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.
India’s online wagering market is growing at a rate of over 20% annually and has become an attractive market for global operators and B2B suppliers due to the country’s rapid development (GDP per capita has doubled since 2009) and the presence of over 370 million bettors. The Indian cricket wagering industry alone is estimated to already be worth US$150 billion, with around 85% of Indian bettors wagering on the sport.
US bettors are incredibly frustrated with both the US online wagering experience and the US taxation system (regarding the treatment of winnings). These hurdles are pushing volume to unregulated operators, such as those operating in Costa Rica. Regulated operators (such as FanDuel) are able to develop strong brand awareness in the US through marketing channels unavailable to unregulated operators. A vote on Flutter’s US listing would require a 75% approval rate at Flutter’s April annual meeting.
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. 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.
The world’s largest professional betting syndicates wager billions of dollars each year by exploiting a unique ‘edge’ across sports and horse racing. 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.
Flutter effectively leverages its experience gained outside the US to grow FanDuel with a focus on near-term profitability. In 2021, the US represented just 22.5% of Flutter’s overall revenue. Flutter’s third quarter results demonstrated FanDuel’s clear market leadership, with 42% gross gaming revenue market share in online sports betting and 18% market share in iGaming.
Another way that bookmakers can appeal to a younger, digital-native generation of bettors, is by promoting the social aspect of betting. Bettors have always discussed their top picks with their friends, but this was not previously embedded within bookmakers’ apps. By bringing together social media and wagering, bookmakers hope to improve customer retention and lifetime value. Social betting also plays into the growth of influencers, with respected bettors able to build large followers who can copy their bet.
Wagering companies are slowly adopting a new approach when it comes to their marketing strategy, with more and more businesses turning to influencers to spread the word. That’s not to say the value of traditional marketing has been lost; both have a role to play and both serve very different yet important functions. Traditional marketing is critical at a macro level to build brand awareness, reach mass audiences, and further brand alignment. On the other hand, influencer marketing allows brands to connect more closely with their customers, creating a more subtle and meaningful way for businesses to drive sales.
There are 3 billion video gamers globally and 54% of frequent gamers believe that gaming helps them connect with their friends (ESA). The first PlayStation was released in 1994 and the first Xbox followed in 2001. Runescape was released in 2001, paving the way for the growth of MMORPG (Massively Multiplayer Online Role Playing Games), allowing millions of players to connect, chat and compete together.
Affiliate marketing pays external publishers to generate traffic/leads for them. There are two main revenue models for wagering affiliates: revenue share and cost per acquisition (CPA).
With 2000+ content sites and applications, Denmark-based Better Collective (BETCO:SS) is an industry-leading affiliate with over 250 operator clients (including bet365, FanDuel and Coral).
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.
