Assessing the crypto wagering opportunity

In his latest column, Tom Waterhouse delves into the burgeoning opportunities presented by cryptocurrency wagering and examines the performance metrics of leading crypto betting companies.

In May of last year, we first discussed the revolutionary potential of crypto wagering, now recognized as the fastest-growing sector within the broader wagering industry. Prominent online crypto operators like Stake.com and Sportsbet.io have emerged as formidable players and globally recognized brands.

The global online betting industry reported revenues of approximately $58.2 billion in 2021, with projections estimating a significant climb to $145.6 billion by 2030. The rising adoption of crypto betting is anticipated to catalyze much of this growth.

Sportsbet.io currently boasts an impressive monthly turnover of $2.7 billion. For comparison, Australia’s largest traditional operator averaged approximately $1.2 billion per month in 2021, commanding around a 50% market share in the region.

Furthermore, Sportsbet.io has strategically allied with several prestigious football clubs, including Southampton, Arsenal, and São Paulo, thereby enhancing its visibility and market appeal.

Why Cryptocurrency?

Cryptocurrencies such as Bitcoin, Ethereum, and Litecoin are revolutionizing transaction processes by enabling rapid and cost-effective transactions. This efficiency results in near-instant payouts and significantly reduces operational costs for crypto wagering enterprises.

Players enjoy the advantages of swift deposits and withdrawals, coupled with enhanced anonymity and robust data privacy when engaging in online betting.

Operators like Stake.com and BitStarz Casino prioritize superior user experience (UX) parameters, often outpacing their fiat counterparts. Their emphasis on customer-centric designs positions them as industry leaders in terms of UX. In contrast, established operators have been comparatively sluggish in adapting to these innovative trends.

For instance, Stake.com continuously introduces new slot games while maintaining its roster of proprietary Stake Originals, thereby diversifying and enriching the user experience.

Customers engaging with crypto wagering platforms are often rewarded with higher bonuses, better promotional offers, and improved odds. This is a direct result of operators passing on operational savings derived from lower transaction fees compared to traditional fiat operators.

The accompanying selection of Trustpilot scores illustrates players’ clear preference for emerging crypto operators like Stake.com and BitStarz Casino over established fiat giants.

New-Age Wagering Platforms

The crypto wagering segment presents a wealth of opportunities for developing advanced back-end platforms tailored for operators in this sector.

While numerous established platforms exist for fiat operators—such as Kambi, SBTech, Entain, OpenBet, Amelco, and Aspire Global—only a select few have been designed specifically for crypto operators.

Upon evaluating these platforms, we identify several functionality gaps that persist within their capabilities.

Here, we outline the essential features that cutting-edge wagering platforms should encompass. Most current providers are built on outdated technology, necessitating extensive development efforts for any adaptations or upgrades.

Modern platforms ought to facilitate racing, sports, and gaming while integrating payment options for both cryptocurrencies and traditional fiat seamlessly. It is crucial that new platforms incorporate cryptocurrency as a fundamental component of their technical architecture, not merely as an afterthought.

Investing in a wagering platform diversifies revenue streams across a global operator client base. Typically, platforms charge an integration fee alongside a revenue share of up to 25% of gross gaming revenue (GGR), contingent on the scope of services rendered.

Some platforms may also offer optional ongoing development services at an additional cost. By leveraging revenue from a multitude of operators, crypto wagering platforms are positioned to benefit from the overall sector’s expansion while mitigating the operational risks associated with individual businesses.

Sanco Technology

A crucial aspect of Waterhouse VC’s strategy involves identifying management teams with extensive domain expertise. We seek teams knowledgeable in developing and overseeing successful wagering platforms in highly competitive markets.

One notable team has launched Sanco Technology, a private company currently in the fundraising phase for its platform development.

Sanco’s platform is designed with “plug-and-play” crypto integration capabilities, aimed at serving a global client base, particularly targeting emerging crypto wagering operators. The platform is architected in a modular manner, allowing operators to customize elements according to their unique needs.

Sanco Technology is one of several promising opportunities in the crypto wagering landscape that Waterhouse VC is actively engaging in.

DISCLAIMER AND IMPORTANT NOTES

The information provided in this document is for informational purposes only and does not constitute investment or other advice. Readers should seek personalized professional advice tailored to their circumstances.

General Information Only

This material is intended for general information purposes and does not constitute an offer for the purchase or sale of any financial products or services. It has been compiled for investors qualifying as wholesale clients under sections 761G of the Corporations Act or for individuals not requiring a regulated disclosure document under the Corporations Act. This material is not designed to provide financial or tax advice and does not account for your objectives, financial situation, or needs. While we strive for accuracy, reliability, and completeness, no warranty is provided, except where liability cannot be excluded under statutory provisions. Past performance is not indicative of future results, and no guarantees of performance, capital return, or specific returns are provided by Sandford Capital, Waterhouse VC, or any other entity. To the fullest extent permissible, Sandford Capital, Waterhouse VC, or any other party does not accept liability for any statements contained within this material.

Financial Regulatory Oversight and Administration

Waterhouse VC is an Australian Unit Trust denominated in AUD and accessible to wholesale institutional investors globally with a minimum investment of AUD 1,000,000 or equivalent in USD/EUR/GBP/JPY/CHF. This material has been created by Waterhouse VC Pty Ltd (ABN 48 635 494 861), hereafter referred to as ‘Waterhouse VC’, ‘Trustee’, ‘us’, or ‘we’, acting as the Trustee for the Waterhouse VC Fund (the ‘Fund’). The Trustee is a corporate authorized representative (CAR 1296688) of Sandford Capital Pty Limited (ABN 82 600 590 887) (AFSL 461981) and has appointed Sandford Capital as its AFS licensed intermediary in accordance with s911A(2)(b) of the Corporations Act 2001 (Cth) to coordinate the offering of fund units.

Performance

Waterhouse VC’s past performance is not a reliable indicator of future outcomes. Waterhouse VC Pty Ltd does not guarantee the performance of any strategy or the return of capital or any specific rate of return for investors. No provision has been made for applicable taxation. We advocate for a long-term perspective in investing.

Governing Law

These Terms and Conditions of use are governed by and construed in accordance with the laws of New South Wales. By accepting these Terms and Conditions, you agree to the non-exclusive jurisdiction of the courts of New South Wales, Australia, for any matters concerning these Terms and Conditions.