Gambling – unstoppable vice or just a natural human urge to take a risk? Whatever your opinion on it, making bets is certainly big business, with the online sports betting market alone worth roughly £650m. And with such a huge variety of gambling available, from high-end casinos to your local William Hill slot machines, it’s a desirable market for gambling startups to crack. The numbers show that entrepreneurs haven’t held back – equity fundraisings into gambling startups have increased year-on-year since 2012, with a compound annual growth rate of 38%.
Who’s taking a bet?
Importantly, and interestingly, every single Beauhurst-tracked gambling startup is also a technology business. The online side of the industry has been on the up since the first online casino launched in 1996, and remains the fastest growing area. Businesses are broadly split into two categories. There are those offering online betting and gaming themselves, such as Casino VR, who are developing a virtual reality online casino, or BetGame, who have an online platform which allows users to bet on Playstation or Xbox games. Other companies provide services to the online betting platforms, such as FSB Technology, who specialise in engaging customers during live sporting events.
Betting on disruption
There is one major sticking point for budding gambling startups. Starting up a betting game isn’t quite like starting up a messaging app, as the gambling industry is heavily regulated to protect punters and keep the criminals out. Adding a real-money gambling element to a game requires licensing by the Gambling Commission, which can be a hurdle to entry. One high-growth business is addressing this issue. Betable allows games to offer real-money gambling, which is executed and delivered by the fully licensed startup through their API. Founded in 2009, the company has raised £13m in two rounds of fundraisings, the most of any Beauhurst-tracked betting business.
Odds for the future
So what do we predict for gambling startups? Given the lucrative nature of the business, we think businesses will continue finding applications for technology as long as some market exists. There is one worrying angle: the common thread in all of these betting technology businesses is making gambling easier and more engaging. As the industry is already fairly contentious, with accusations including preying on the weak and encouraging irresponsible behaviour, we can’t help but wonder whether using technology to make gambling more immersive and perhaps more addictive might be a step in the wrong direction. Maybe the next wave will be tech for responsible gambling, although it seems unlikely for now.