iGB brings readers a new column from Tom Waterhouse of WaterhouseVC. In this first part, he analyzes businesses that will drive growth and adoption in cryptocurrency betting.
The growth of crypto betting and Web 3.0 is reversing traditional betting.
The entire real-world betting ecosystem is being rebuilt in virtual worlds like Decentraland, offering opportunities and risks to incumbent operators.
In Decentraland, players must first purchase or transfer cryptocurrency (MANA or DAI) tokens to their Decentral Games wallet, where they can bet on certain games.
Online crypto operators with a similar UX to online fiat operators like FanDuel and DraftKings are already posting outstanding turnovers.
In Q3 2021, the total number of bets placed using cryptocurrency increased by 181% year-on-year, while the share of bets in crypto (43.3%) is rapidly approaching fiat (source: Softswiss).
For example, the crypto-focused Sportsbet.io (not to be confused with the Australian ‘Sportsbet’ business owned by Flutter) records a turnover of US$2.7 billion per month.
To put this in perspective, in 2021 Australia’s largest operator averaged US$1.2 billion monthly turnover and has a market share of around 50% in the country.
Sportsbet.io has partnered with many famous football clubs including Arsenal, Southampton and São Paolo.
The fund focuses specifically on companies that provide a critical B2B service to gaming and betting operators. Examples of this include investments in racing data providers, voice and text to betting solutions, and affiliate marketing services.
An interesting business we’ve seen on the Metaverse is Admix, which was founded in 2017 by Sam Huber.
Admix’s core business is the creation and delivery of in-game ads that don’t affect the player’s experience. This aligns the interests of the advertiser, the game developer and the player.
Admix already counts many of the largest global brands as customers, with over 1,000 brands purchasing Admix inventory each month.
One persistent criticism of Web 3.0 is the lack of monetization in worlds like Decentraland and The Sandbox. But Admix shows how critical B2B service providers can monetize Web 3.0.
Admix is incredibly excited about the growth of Web 3.0 but is taking it closer to a real estate developer. Since 2020, the company has been buying land in Decentraland and The Sandbox and renting it out to several brands that are current customers of its core ‘in-game advertising’ business.
“The same concepts of proximity, how the price is established, and why you’re going to buy versus rent, these are all the same questions you would ask about physical real estate.”
Sam huber, CEO, AdmiX
Building experiences on plots of land and leasing them back to clients has sometimes resulted in monthly rents of over $60,000 and profit margins per development exceeding 70% (Fast Company). For example, Admix has developed a display of oversized perfume bottles for L’Oreal at Decentraland and has made temporary installations for events such as New York Fashion Week.
It comes as no surprise to us that most of the current activities in Decentraland take place in a digital Sin City District of Vegas City.
We envision that service providers like Admix will apply their experience from previous tangential ventures to the growth of crypto gaming and betting, perhaps attracting customers like Sportsbet.io and mature land-based brands like Caesars, Wynn and MGM.
It wouldn’t surprise us to see many of these businesses on an Admix billboard in Decentraland.
Dominant Web 2.0 companies are usually only 20 years old and took several years to start generating meaningful income. Their extraordinary growth has made many of these businesses the largest in the world by market capitalization.
They all have one simple thing in common – they provide a service their customers need or love. For example, running an e-commerce business without Google ad spend is nearly impossible these days.
Evolving worlds like Decentraland and The Sandbox often allow landowners to steer the path to monetization, and we’re excited to see this continue to evolve.
|Company Revenue (USD million)||First Full Year||First Full Year +2||First Full Year +5||First Full Year +10||First Full Year +15||2021|
|Meta (founded in 2004)||9||153||777||12,466||70,697||117,929|
|Google (founded 1998)||0.22||70||3,180||2,370||65,670||257,637|
|Amazon (founded in 1994)||0.51||147.8||2,760||8,490||34,204||469,822|
|Twitter (founded in 2006)||0||4||106||2,530||5,077||5,077|
|Nvidia (founded 1993)*||13.3||374.5||1,369||3,069||3.998||26,914|
Since its establishment in August 2019, water house VC Assuming all distributions are reinvested, it earned a total return of 2.057% as of April 30, 2022.
Please note that the above information regarding Admix, DraftKings, Decentraland, The Sandbox, Sportsbet.io, Meta, Google, Amazon, Twitter, Nvidia, Caesars Entertainment and MGM Resorts is based on publicly available information about the company and should not contain it. should not be considered or construed as financial product advice. Waterhouse VC has a position at Flutter, Meta and Google. The information provided in this document is general information only and does not constitute investment or other advice. Readers should consult and trust professional investment advice specific to their individual situation.