Part three: The most eye-catching startups bidding to disrupt the online sector

Fanslide

Category: In-play daily fantasy sports

Launch: 2022

HQ: Remote

Founder: Joe Cocozza

Dubbed the world’s first live in-play fantasy football game, Fanslide is the brainchild of ex-Ladbrokes trader and Fitzdares co-founder Joe Cocozza. The idea for the product cropped up while he was watching a football match on a Monday night. Although placing a bet on the game made it more interesting to watch, Cocozza felt it was an inefficient way of making the experience more entertaining. I just started thinking about the whole world of fantasy sports, that sports audiences are so much more intelligent and well informed. They understand the data and the stats and are much more articulate than they have been in the past. People who play fantasy Premier League, for example, spend hours researching their lineups. But when the match actually starts, there’s nothing you can do with any of it. So, if you want to engage in a match that’s live, you have to place in-play bets,” he remarks. This link between fantasy sports and betting sparked the idea for a game that could overlap during live sports. Played live on individual matches, Fanslide allows users to ‘slide’ players in or out of a football game for a maximum of 20 minutes. Using real-time data from Opta, fans can select up to three players at a time to score points from during in-game events such as scoring goals or winning tackles. The startup, originally founded in 2017, was bootstrapped by Cocozza alongside other individuals. The business then raised more money through individual angel investors and the UK government’s enterprise investment scheme, before going on to receive its very first funding from an institutional investor in June 2022. “We’re the only game where the user gets to interact and make decisions during a match in response to what’s happening on the pitch,” Cocozza comments. “Everything we do, everything we’ve done and everything about our products is innovative in that there isn’t anything else like it out there in terms of an in-play fantasy game.” The product itself has developed over the years following in-house testing of the game across different demographics. Using the team’s own judgement, based on the psychology of the game, further changes were made to make it more engaging and enjoyable. We want people to feel invested in the game emotionally,” explains Cocozza. “What’s key for us in making the game fun is that people care about the decisions they make. So, you have to structure the mechanics of the game in such a way as to get them to think about what their slides are going to be and what their decisions are going to be in the game. That way they’re engaged in the outcome because they care,” he adds. Building the app in 2020 involved overcoming a great deal of technical challenges due to everything being live and immediate. “The way the data is updated by Opta is highly mutable. We have to ensure the integrity of the game is protected, so we have to update things ourselves, delete events when they get deleted and create new ones when something gets updated. The technical evolution of the product has been a pretty steep curve,” he confesses. Fanslide has been live as a free-to-play game on the App Store since September 2020, culminating in two years of open beta testing and development. The key stat to come out of its testing over the last season was the average in-game time on the app per match, which amounted to 28 minutes and 43 seconds. The latest offering is a pay-to-play version for UK players which soft launched at the start of the season. Taking its first bet on 19 August 2022, Cocozza stresses that the free-to-play game remains the startup’s bread and butter and the pay-to-play option is not being pushed hard just yet. While the app has only launched with football so far, Fanslide is working on a cricket T20 prototype as well as having the NFL and the NBA on its roadmap. The next step is to apply for a full remote betting licence to be able to offer in-play betting to those customers who want it. “We can offer data-driven betting because users can tell us what they think is going to happen in the match by their slides, and we can offer curated opportunities based on what they’ll likely want to engage with,” states Cocozza. Alongside developing games for other sports, Fanslide is also looking at other markets to enter, either directly by acquiring licences or licensing games on a B2B basis. “We know through our testing and through our non-betting products that we have a really engaged audience in Africa, for example. We think there are many parts of the world where we have an amazing platform with which to engage football fans while they’re watching a match. And, if there are people that would like to bet, then we’re the perfect platform for them to do so.”

BetDEX

Category: Decentralised exchange betting  

Launch: TBC

HQ: Edinburgh, Scotland 

CEO: Varun Sudhakar

Unless you have been living under a rock for the past couple of years, it is hard to escape all the chatter about Web3, the latest iteration of the World Wide Web with blockchains and decentralisation at its core. Research firm Gartner describes Web3 as: “A new stack of technologies built on blockchain protocols that support the development of decentralised web applications and enable users to control their own identity, content and data.” While sceptics dismiss it as an overhyped technology, that hasn’t stopped a whole host of companies – large and small – investigating and/or fully embracing Web3. This includes the team behind BetDEX, a decentralised betting exchange that raised $21m last November in a seed round led by crypto-investment firm Paradigm and cryptocurrency exchange FTX. BetDEX will run on what’s called the Monaco Protocol, which was partly built by the BetDEX team and will offer bettors “fast, low-cost trades across a shared liquidity pool”. As well as the Monaco Protocol being fully decentralised, open-sourced and permissionless, third parties will be able to create markets to build their apps on top of the platform. This could include established or new igaming operators. BetDEX itself has been founded by three FanDuel alumni: Varun Sudhakar, Stuart Tonner and the DFS giant’s co-founder Nigel Eccles, who, incidentally, knows a thing or two about betting exchanges having worked at Flutter at the turn of the century and later at Betdaq when peer-to-peer betting began to truly explode. We saw a lot of issues in the betting space primarily relating to user experience,” explains Sudhakar, BetDEX CEO, on a Teams call from New York. “People finding it difficult to withdraw their money from certain platforms and people having their stakes limited is the reason why BetDEX was created in the first place: to fix these problems.” And so far, there has been a great deal of interest among the crypto community. According to BetDEX, just over 1,000 people have been granted access to place bets in a closed beta, while more than 80,000 were on the waiting list in August. An open beta involving the public will begin in a few months and other sports will be added besides football. The Monaco Protocol – on which BetDEX sits – is built on the Solana blockchain, mainly because it doesn’t have the expensive transaction, aka ‘gas’, fees or scaling limitations associated with that other blockchain with decentralised apps (Dapps), Ethereum. Indeed, Solana transactions cost just a fraction of a cent and the network can handle up to 50,000+ transactions per second. Hence why it has been dubbed ‘the Ethereum killer’. Sudhakar says: “To provide the best user experience on any exchange, whether it is stock, currency, commodities or sports betting, it has to be fast and it has to be cheap. Solana was the clear entry for us as Ethereum isn’t that fast. I’m not anti-Ethereum but Solana was the easiest choice.” While users will be able to eventually use cryptocurrencies like Solana’s SOL, BetDEX will initially accept payments using a so-called ‘stablecoin’ – a cryptocurrency pegged to a fiat currency like the US dollar. BetDEX’s stablecoin is USDT, otherwise known as Tether. Of course, one of the main challenges facing any new betting exchange is liquidity. So, the people behind an exchange will tend to either seed markets themselves to kickstart liquidity when markets have just opened, or strike partnerships with third-party market-makers. We’ll definitely have to use market-makers at the beginning,” Sudhakar confirms. “But I also think Web3 and blockchain gives you an interesting growth channel as it relates to liquidity. You are able to use the fact that as a decentralised Protocol, people can kind of govern the Protocol and have a real say in it in a way that Web2 doesn’t.” Being decentralised means all matched bets will sit inside a smart contract and be automatically settled after the event and before funds are quickly sent to the wallets of the winning players. That sounds all well and good but what happens if there is a dispute over the result? Sudhakar says they are still working through the “exact mechanics” but adds: “There will be what you could call an insurance fund set up by the DAO [decentralised autonomous organisation] community who are part of the Monaco Protocol and there will be a mechanism for individuals if there is a dispute, like the Formula One race last year with Lewis Hamilton and Max Verstappen. A board will help adjudicate that decision.” While there are still issues to be resolved and much testing being undertaken, Sudhakar reveals that the seed round buys BetDEX “at least four years of runway” and therefore the founders aren’t actively fundraising. In fact, the CEO says the secured funding, the nature of this unique project and the “pretty incredible” 22-person team he works with on both sides of the pond makes BetDEX a joy to build. “Waking up and going to work doesn’t even seem like work at this point,” Sudhakar smiles

Startups in numbers

• $50m: Total capital raised by Betr over the course of its Series A and Series A1 rounds
• 600%: Increase in revenue PrizePicks recorded between 2020 and 2021
• $900k+: Overlay WPT Global expects for its $1 for $1 Million Tournament
• 1 million+: Customer signups to date at Players’ Lounge since its 2016 launch
• $21m: How much BetDEX secured in seed funding last November

Various sources

Small is beautiful

A roundup of other eye-catching industry startups

Jackpot

The online lottery ticket app closed a $35m Series A round in June co-led by Accomplice and Courtside Ventures, along with investment from the likes of DraftKings CEO Jason Robins and NBA star James Harden. According to Jackpot, in 2021 half of Americans bought lottery tickets, yet only ~5% were online transactions.

Prophet Exchange

Prophet Exchange, a New Jersey-based firm founded in 2018 by Dean Sisun (CEO) and Jake Benzaquen (COO), went live in its home state at the end of August as it became the first legal sports betting exchange in the US. Prophet Exchange will launch in Indiana and other states in 2023 via its market-access agreement with Caesars Entertainment.

PokerAces

John Caldwell and Bob Williams, formerly of PokerStars and Full Tilt Poker, respectively, are in the process of launching an NFT poker platform that promises to deal with the scourge of players using RTA and bots. With PokerAces, AI poker bots will battle against each other until the prize money bubble bursts, after which human players take over.

Betconnect

Daniel Schreiber created UK-licensed Betconnect in 2019 for those who have had their bookmaker accounts restricted or closed. Inspired by how financial trading app eToro allows amateurs to follow the advice of pros, Schreiber describes Betconnect as a “hybrid exchange” which also allows punters to get the best price with the bookmakers using a single wallet.

Underdog Fantasy

The Brooklyn-based fantasy sports operator secured $35m in Series B funding in July, taking the company’s valuation to $485m, with plans afoot to use the cash to expand into sports betting. Underdog is founded by Jeremy Levine, the previous co-founder of DFS startup DRAFT that was bought by Paddy Power Betfair for $48m in 2017.