Waterhouse VC: Spotlight on industry leaders – People

In his latest column, Tom Waterhouse of Waterhouse VC highlights three prominent leaders in the gambling industry, dissecting their unique paths to success and the innovations shaping the future of wagering.

The gambling industry is characterized by its dynamic nature and influential figures who spearhead change. This month, we delve into the journeys of three noteworthy leaders: Tim Heath, a pioneer in crypto wagering; Peter Jackson, CEO of Flutter Entertainment; and David Walsh, one of the world’s preeminent professional horse racing gamblers.

Over the past decade, the online gambling sector has undergone remarkable expansion, driven primarily by the rise of mobile-focused platforms. Heath and Jackson stand at the helm of companies championing digital innovation within this rapidly evolving landscape.

Tim Heath: Revolutionizing Crypto Wagering

Hailing from Australia, Tim Heath is a serial entrepreneur and venture capitalist within the wagering sector. After completing his studies, he launched a software development and e-commerce firm, Heathmont.net, which laid the groundwork for his future ventures.

In 2013, Heath founded Coingaming Group, a pioneering crypto wagering operator that rebranded to Yolo Group in 2021. The group is now renowned for its prominent B2C brands, Sportsbet.io and Bitcasino.io, both considered trailblazers in integrating cryptocurrency into the wagering experience. Previous discussions highlighted the impressive growth of crypto wagering and the impressive service offerings of Sportsbet.io.

With a robust workforce of over 600 employees, Yolo is a significant player in both the wagering and venture investing arenas. The company has been at the forefront of integrating streaming services for major sports events and was an early innovator of the now-standard “cashout” feature.

Notably, Sportsbet.io and Bitcasino.io allow players to withdraw funds in as little as 1.5 minutes, positioning them among the fastest in the industry. Heath’s unwavering commitment to customer experience has helped Sportsbet.io emerge as one of the leading global crypto wagering platforms, boasting a staggering turnover of over US$2.7 billion per month. For context, Australia’s largest traditional operator recorded an average turnover of US$1.2 billion monthly in 2023, commanding a significant portion of the market.

Looking ahead, Heath is focused on reforming the international payments landscape, particularly criticizing the current reliance on the SWIFT system for its inefficiencies, including delays and privacy concerns.

Peter Jackson: Scaling New Heights

As the CEO of Flutter Entertainment since January 2018, Peter Jackson has driven the company to remarkable heights, resulting in a doubled valuation and securing its status as the world’s largest publicly listed wagering operator. Only Bet365, a private entity owned by the Coates family, rivals Flutter in terms of global reach.

Flutter is currently the only publicly listed B2C wagering operator in Waterhouse VC’s portfolio. Educated in manufacturing engineering at Cambridge, Jackson refined his leadership skills during a three-year tenure at McKinsey before moving on to a variety of roles at Halifax Bank of Scotland, culminating in its acquisition by Lloyds in 2009.

At just 34, Jackson became CEO of Travelex, a foreign exchange company, where he enhanced revenues and led the company to a £1 billion sale. His prior role on the Board of Betfair in 2013 paved the way for his eventual appointment as CEO of Flutter five years later.

From the outset, Jackson established a focus on enhancing scale and operational efficiency within an industry marked by both high taxation and stringent regulation. By leveraging his consulting and banking experience, he has nurtured a suite of operations that excel in their markets through both organic growth and strategic mergers and acquisitions, including MaxBet and Junglee Games.

The Flywheel Effect: Driving Revenue Growth

Flutter’s strategy benefits from a “flywheel” effect, wherein accessing the broader group’s global industry insights, technological advancements, customer behavior data, and analytics significantly bolsters each division’s performance.

This strategy has propelled Flutter’s U.S. venture, FanDuel, to a stunning 11-fold revenue increase—from US$300 million in 2018 to approximately US$3.3 billion in 2022—now commanding a leading 37% market share in the competitive U.S. market.

Among Jackson’s recent accomplishments is the successful dual listing of Flutter on the New York Stock Exchange (NYSE:FLUT) on January 29, enhancing access to U.S. capital markets. This strategic move allows for the provision of stock incentives to American-based employees, reflecting the higher historical valuations commanded by U.S. equities, ultimately benefiting Flutter’s shareholders.

David Walsh: The Art of Professional Gambling

The wagering industry serves to entertain, but only a select few can derive profit without incurring costs for this entertainment. Estimates suggest there are fewer than 50 betting syndicates globally capable of sustained profitability. Among them, David Walsh, in partnership with Zeljko Ranogajec, stands out as one of the most successful gamblers.

This syndicate places bets across various domains, including horse racing, sports, lotterie, casinos, and financial markets, reportedly achieving an annual turnover exceeding $3 billion, with some sources suggesting even higher figures.

Walsh has invested approximately $75 million to establish the Museum of Old and New Art (MONA), earning recognition as an Officer of the Order of Australia (AO) for his considerable contributions to the visual arts and philanthropic efforts across diverse sectors.

Challenges for Emerging Syndicates

Professional bettors possess exceptional intelligence and a unique skill set, allowing them to analyze the intricacies of each sport, casino game, and lottery. They adeptly model hundreds of factors to ascertain the “true” probability of outcomes and run sophisticated betting operations that require adept management of extensive teams.

In horse racing, expert teams blending mathematics, statistics, and computer science work continuously to develop algorithms that process vast amounts of historical data along with relevant racing-specific factors like track conditions and jockey performance, significantly informing betting decisions.

As previously discussed, racing betting syndicates enjoy unique advantages, such as receiving rebates on their wagers, regardless of the outcome. These rebates are tied to substantial wagering amounts, enhancing their existing competitive edge and creating significant hurdles for emerging syndicates attempting to gain traction in the racing market.

Waterhouse VC is a dedicated fund for wholesale investors, specializing in both publicly listed and private businesses within the gambling and gaming sectors.

Since its inception in August 2019, Waterhouse VC has achieved an impressive gross total return of 2,858% as of February 29, 2024, assuming the reinvestment of all distributions.