Tom Waterhouse on Crypto Wagering: Innovation and Market Strategies

Tom Waterhouse of Waterhouse VC delves into the burgeoning opportunity of crypto wagering and the strategies that can help operators thrive in this dynamic and competitive market.

“Innovation is the ability to see change as an opportunity, not a threat” – Steve Jobs.

The wagering industry has been a pioneer in innovation across user experience (UX), marketing, and payments. Online crypto operators like Sportsbet.io and Stake.com, which offer a UX similar to online fiat operators like FanDuel and DraftKings, are at the forefront of this innovation, recording impressive turnover and leading in marketing and payments.

As of May 2022, Sportsbet.io reported a monthly turnover of US$2.7 billion (£2.12bn/€2.51bn), a figure that has likely grown. To provide context, Australia's largest operator in 2023 averaged a monthly turnover of US$1 billion, holding around 45% of the market share in the country.

Influencer Marketing Dynamics

Stake and other prominent crypto-wagering operators dominate the streaming landscape through celebrity partnerships, such as with Drake. On the other hand, emerging operators like Shuffle.com are focusing on micro-influencers—those with dedicated followings of 1,000 to 10,000 true fans. These influencers, often undervalued or overlooked by established operators, offer a cost-effective marketing channel.

Dedicated fans engage deeply with influencers, not just by liking posts or watching streams but through constant interaction in group chats. An influencer with 10,000 dedicated fans can generate more revenue per dollar spent compared to an influencer with a million fewer engaged followers.

The Rise of Shuffle

Launched in 2023, Shuffle is a notable new entrant in the crypto wagering market, excelling in marketing, customer retention, and payment innovation. The company has swiftly expanded, already facilitating over US$6 billion in bets.

Led by Noah Dummett, a 24-year-old crypto native from Australia with experience at Bitmex, Shuffle's management team emphasizes marketing expertise over traditional wagering industry experience. Noah is confident that crypto wagering operators can match the size and profitability of the major exchanges he previously worked with. Shuffle’s young and focused team, with an average age of 24, is set to double its staff in the next 18 months.

Ishan Haque recognizes the power of influencer marketing and community-building, leveraging live streaming, betting group chats, and crypto communities to drive engagement.

Strategic Marketing and Retention

Shuffle, similar to dominant players like Stake, plans to unveil significant brand ambassadors and endorsements with top-tier sports teams and celebrities later this year. Initially, smaller operators should strategically pursue high-ROI advertising deals before tackling larger marketing initiatives. Key metrics include the conversion rates from eyeballs to sign-ups, sign-ups to first-time deposits, and the retention duration of depositing players.

Maintaining customer engagement post-influencer promotion is crucial. Personalized offers, community engagement, and ongoing promotions are essential for sustained retention. Haque attributes Shuffle’s early success to quickly acting on product feedback, emphasizing that even the best marketing strategies fail without an engaging product.

Shuffle’s platform features a custom UI and in-house developed games prioritizing speed and user experience. For instance, tools like “Advanced Dice” enable seamless transitions between games such as Plinko, blackjack, NBA parlays, and election bets without lag. Shuffle’s casino games also offer high return-to-player rates (RTPs), with house games at 99% and slots at 97%.

Focus on Niche Markets

At Waterhouse VC, the belief is that offering a full suite of world-class wagering products is vital for success. This is why their investments focus on B2B suppliers, critical for operators to differentiate through product and UX in a competitive industry.

Emerging wagering businesses, whether B2B or B2C, are most successful when dominating a niche without a clear market leader. For Shuffle, early growth targeted Japan, an underserved market in crypto wagering at the time.

Targeting multiple regions requires understanding the complexities of localization, culture, and acquisition channels. Instead, new operators should focus on a single market, hiring native speakers, offering localized support, aligning the brand with local culture, and understanding local content preferences. This strategy is particularly relevant for newly regulated markets like Brazil.

Companies like Shuffle, Stake, and Sportsbet.io demonstrate that a differentiated product, innovative marketing, and exceptional user experience can drive rapid revenue growth in the highly competitive wagering industry.