Investors are now focusing more on companies which supply sports betting businesses with technology and services, rather than the betting brands themselves. They believe these B2B suppliers offer better value as the global sports betting market changes quickly.
To unpack this further, Insider Sport sat down with Tom Waterhouse, Chief Investment Officer at Waterhouse VC. A former CEO of William Hill Australia, Waterhouse brings a rare operator’s lens to venture investing.
In this interview, he explains why infrastructure plays are often underestimated, what he looks for in early-stage deals and how the industry can evolve to stay relevant with the next generation of fans.
Read the full conversation below.
Your experience running William Hill Australia gives you a unique perspective on the sports betting ecosystem. How does this background influence the way you identify investment opportunities today?
We built Tomwaterhouse.com from scratch and sold it to William Hill three years later. It was a real grind and we made plenty of mistakes, but the lessons were invaluable as they gave us a blueprint in how to scale a wagering business.
Running a large scale operator, like William Hill, also gives you a more realistic view of which businesses are likely to succeed. As an operator, you see new exciting new products all the time, but the reality is that you can only progress a handful each quarter. There are on-going priorities which can change at any moment and integrations take time.
We focus on infrastructure that’s genuinely critical to operators, with technology that solves expensive problems or moves P&L in a meaningful way, not nice-to-haves.
You’ve mentioned that many profitable B2B companies in the wagering space are overlooked. Why do you think these opportunities remain “hidden in plain sight”?
Suppliers are much harder to assess as success is dependent on distribution. With operators you are looking at the same P&L lines in every market. With suppliers, you need to understand the underlying tech to judge whether it can scale from one market with five operator contracts to a hundred globally.
Our deal sourcing capabilities have been improved by our network. Our investors have industry experience who share deals and provide insights from their own experience. We are easy to reach, so any business can get in touch and send a pitch. Even if it is not a fit, speaking with the founders is usually worthwhile. We also travel to conferences around the world and meet as many teams as we can.
Can you give an example of a B2B business in sports or wagering that investors tend to underestimate, but which you see strong potential in?
We see a big opportunity in solutions that tackle offshore leakage. It is a global problem and it matters to regulators, governments and operators that have invested to become compliant.
We look for companies that can help operators move towards product parity where regulation allows. The goal is to cut friction at every step and make the player journey seamless and engaging. If the regulated path has too much friction, players drift offshore.
When evaluating potential investments, what key factors do you look for to determine whether a company has a sustainable competitive advantage?
We back businesses that are generating revenue, have signed contracts with operators, offer standout technology, and are led by an ambitious team.
The hardest step for a supplier is getting those first integrations over the line. Once they do that and prove the value, we can help them scale.
When we started the fund, I hired the best engineers I worked with to evaluate technology across the industry. Having a deep understanding of the underlying tech is so important, especially now as AI has accelerated speed to market. To build a moat the product has to be hard for even well-resourced teams to replicate.
Looking ahead, where do you see the most exciting opportunities emerging in the global sports wagering or sports tech ecosystem over the next five years?
Online casino has captured how younger audiences want to engage, with live streaming and social features where you can stake alongside favourite streamers. Sports betting has room to grow in that direction. Betting has historically been social for many people, yet most major operators still lack products that recognise this. Younger fans also watch and interact with sports differently, so the product needs to meet them where they are.
You’ll be speaking on the ‘Big Games, Bigger Bets’ panel at SBC Summit Tbilisi. What message are you most keen to share with sports business leaders in the audience?
The main challenge facing sportsbooks today is relevance. TV was transformative when I had TomWaterhouse.com, as we had a regular slot on all the big sporting games, but regulation has made traditional tv advertising harder, and that trend will continue.
Today, operators need to reach the TikTok generation, and find ways to engage audiences here. We have already seen major crypto operators watermark viral accounts on these platforms. Operators should be looking at products that resonate with this type of fan.
Tickets:
- Full Event Pass ($200): Exhibition floor, all conference sessions, daily catering, and both evening networking parties.
- Group Tickets: Buy three or more and save $50 per pass.
- Complimentary Operator & Affiliate Passes.
Co-hosted with SMH Global, SBC Summit Tbilisi will unite 2,000 operators, affiliates, suppliers, and regulators for two days of strategic insights, networking, and regional expertise, making it the go-to event for businesses targeting Eastern Europe and Central Asia.
