Waterhouse VC: Compare the market - Marketing & affiliates

In a recent article, Tom Waterhouse of Waterhouse VC explores the burgeoning opportunities for affiliates in the realm of newly regulated gambling markets, with a particular focus on the evolution of cryptocurrency wagering.

As previously discussed in our earlier newsletters (notably in July 2022), wagering affiliates generate revenue primarily by directing bettors to various bookmakers.

The predominant revenue models utilized by these affiliates are revenue sharing and cost per acquisition (CPA). Affiliates have multiple strategies at their disposal to attract traffic to bookmakers, including the creation of engaging sports-related content and the comparison of odds and promotions from different operators.

For instance, Oddschecker stands as a leading example of a bookmaker comparison platform. This site contrasts odds and promotions from over 25 leading UK bookmakers while providing users with valuable betting tips and insights.

Opportunities in Emerging Markets

Affiliates like Oddschecker are especially well-positioned in emerging markets such as the US, where the competition among operators for customer acquisition is intense. Large and small operators alike can allocate as much as $1,000 for acquiring a single customer, leveraging every marketing avenue available—including comprehensive affiliate marketing strategies.

In fact, the two largest wagering operators in the US invest over $1 billion annually on marketing efforts.

A wave of affiliates has recognized the enormous potential in the US market, with many focusing their organic growth and mergers and acquisitions in this region.

For example, Better Collective acquired The Action Network in May 2021 for $240 million. The Action Network enhances its portfolio with odds comparison tools, various podcasts, and other engaging media content.

Similarly, Bruin Capital purchased Oddschecker from Flutter in July 2021 for a potential total of $218 million, including $190 million upfront, with plans to innovate and expand its offerings into the lucrative US market.

“There are robust connections between Oddschecker’s success in the UK and its potential in the US, where the landscape is fragmented, and expertise in customer discovery and acquisition will be in high demand,” noted George Pyne, founder of Bruin Capital.

In November 2021, FansUnite expanded its portfolio by acquiring American Affiliate for $58.2 million. This strategic acquisition brought in a collection of US affiliate websites that had introduced 150,000 new depositing customers to major wagering platforms, including DraftKings, FanDuel, and BetMGM.

Exploring the Crypto Wagering Landscape

Amid the exciting opportunities presented by newly regulated markets, there is a growing excitement surrounding affiliates that cater specifically to crypto wagering operators.

As discussed in our previous analysis of the crypto wagering landscape published in May, the global online wagering industry recorded revenues of approximately $58.2 billion in 2021, with projections indicating growth to $145.6 billion by 2030.

It is anticipated that the future growth of this industry will be significantly fueled by the increasing acceptance of cryptocurrency for wagering.

Much like the competitive dynamics in the US market, numerous crypto wagering operators are vying for their share of consumer interest. Consequently, affiliates play a crucial role and are well-compensated for facilitating deposits for these crypto operators, with revenue shares reaching up to 50%.

Notably, a dedicated comparison website focused on crypto operators represents a substantial untapped opportunity, which is expected to remain lucrative as the sector matures.

Given that Oddschecker was valued at $218 million while generating 97% of its revenue from the UK, a comparable odds comparison website operating within the expansive crypto wagering arena could attract significant interest and investment.

Additionally, unlike the valuation of crypto operators themselves, affiliate platforms tend to attract higher earnings multiples. For instance, Better Collective boasts a current valuation of 12.5 times EBITDA.

Betscanner: Future Prospects

Betscanner is set to emerge as a formidable player by offering a platform that compares odds from various sporting events provided by crypto bookmakers.

This endeavor will involve data acquisition through either data scraping techniques or forging direct partnerships with bookmakers. The emphasis will be placed on enhancing live odds comparison and optimizing user experience, particularly for esports.

Revenue streams for Betscanner will include monthly retainers from operators, aimed at both driving new traffic and ensuring user retention through enhanced market visibility. Marketing strategies will encompass search engine optimization (SEO), Google Ads, influencer collaborations, social media campaigns, and enticing sign-up bonuses.

Waterhouse VC is actively participating in several exciting ventures, including Betscanner, in this rapidly transforming landscape.

DISCLAIMER AND IMPORTANT NOTES

The information regarding OddsChecker, FanDuel, DraftKings, Better Collective, The Action Network, Bruin Capital, Flutter, FansUnite, American Affiliate, and BetMGM is based on publicly available data and should not be construed as financial advice. Information related to Betscanner is derived from company sources and should not be interpreted as financial product advice. Waterhouse VC has an option deal and signed an agreement with Betscanner. This document provides general information only and does not constitute investment or financial advice. Readers should seek professional investment advice tailored to their individual circumstances.

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