STARTUPS
Success stories New companies like DraftKings and FanDuel have successfully shaken up the sports betting scene by integrating it with fantasy sports and showcasing how innovation can capture a slice of the market. Stake is another success story that focused on the use of cryptocurrencies while attracting certain age groups that are less drawn to traditional online gambling. Decentral Games and BetConstruct on the other hand, are betting hard on blockchain technology and the metaverse. Only time will tell if these bets pay off. However, the life-giving energy of innovation is such a positive force, we can only hope they pave the way for other giants.
Regulation and risk hampering funding
Investing in startups is risky and those who do so know that there will be failures and losses. Investing in unproven ideas driven by new technologies is among the riskiest bets going. Then there are gambling technology startups which deserve a risk category all of their own. Not only do innovators bet on an uncertain future and untested technology, they do so in a highly regulated industry. To compound the challenge, the rules are changing constantly. Licenses are required for an ever-greater number of activities, consumer groups needing protection only ever increase
Case study: Sightline Payments.
Sightline Payments was founded in 2008 with a single vision: to reduce the number of cash transactions in brick-and-mortar casinos. CEO + Co-Founder Omer Sattar told the IMGL conference in Tampa that the rise of the company from startup to unicorn to ubiquity was never guaranteed. “Successful entrepreneurs are in the fortunate position to be able to tell their stories with hindsight. They will often claim they had a fully realized vision and a detailed plan, because they’ve had to hone their story over time to get it across to investors. But I’m always suspicious. That is certainly not true in Sightline’s case. People say to me, ‘it’s ok for you, you’re Sightline’ but it really wasn’t always this way. I’d say our success is at least 50% luck, then there’s a lot hard work over years, adapting and pivoting to a success point. “When we started, the first iPhone was less than two years old. Apple Pay was launched a few years later, and we tend to forget it really struggled with adoption. Mobile tech really had to be well established in the wider world before it could be adopted into gaming. In the early days of Sightline, I worked out of my house for two years, I drove a car with over 280,000 miles, and I ate almost the same food every day for 18 months. Our big pitch was for bi-directional, two-way payments in slot machines, which no one had ever done before. We would go to meetings and people would look at us like we were insane. We tried to license through PayPal, but they didn’t return our calls, so we had no choice but to build it ourselves. Now we’re deployed in almost 100% of the US market and connected to about 95% of all US slot devices. We’re proud of that, especially because when we started, not many people other than our team believed it could be done.
“Back in 2012-3, apart from a handful of visionaries like Anna Sainsbury and David Briggs from GeoComply, no one predicted mobile digital would be so big. We were fortunate that at that time, we had a team member, Charlie Kelly, who challenged our trajectory. He said, ‘What do you mean you’re building a payment system that’s not integrated into mobile?’ It was a great question, and he was right. We listened to him and went back to the drawing board. It seems such an obvious thing to do now, but at the time, that was a big deal for us. We also had great clients, like the legendary Thomas Winters from Golden Nugget in NJ, who challenged us to better and to do mobile. I look back on a decision like that, and the thing I learned is always to be curious, ask questions, be prepared to listen to the answers and acknowledge if you are wrong. “it’s interesting how opportunities can arise. For example, the repeal of PASPA was a milestone, then came the Pandemic, which was a real gamechanger. In May of 2020, we started getting calls from operators who suddenly needed to switch to digital payments, and the field has mushroomed ever since. “From when we started until now we have raised around US$450 million, but all our initial rounds were really small. A few years ago, I would have said raise as much money as you can. Today I would say go for the minimum you need to get where you want to go. Minimise dilution and keep as much control as possible because those VCs are going to squeeze you for every penny. Be tight, be stingy and do your diligence on potential investors. Take your time and be patient when it comes to fund raising. The investors you get are going to be in your business for years to come with lots of different characters so get to know them and, if you can, go for strategic investors.”
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IMGL MAGAZINE | SEPTEMBER 2024
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