Investing in iGaming: The Changing Landscape

Raising funding in the igaming sector is not usual. Some investment activity has been recorded in the UK, given a more established legal framework. In the USA, the opportunity – at least in the sports betting sector – is given now by the change in legislation. The U.S. sports betting market could be worth $5 billion in profits by 2023, according to bank analysts, Jefferies.

Nevertheless, VC investors have always been reluctant in investing in igaming startups, given their mission and the one of their institutional investors or funds of funds. But startups in the field continue to be launched with 22 joining AngelList since the beginning of 2020 from every part of the planet.

Things are changing slowly, with some funds specifically created to invest in the igaming sector, as well. For example, NYC-based seed-stage venture capital firm Vice Ventures in the USA was recently launched to invest in good companies operating in what they call bad industries. In addition, Sports Gaming Investment Fund (SGIF) has launched a new fund focused primarily on the U.S. legal sports betting industry

eSports is also expected to open new investment opportunities. A recent example can be found in the round related to Midnite, a London, UK-based esports betting startup, which raised over $2.5m in funding earlier this year.

Anyways, we can consider this trend still in its infancy and mainly related to sports betting. This is more difficult to happen for online casinos, even if they are reliable and (at a later stage) authorized by the dedicated national bodies. There are some online casinos, which are bucking the trend and well worth keeping an eye on. You can read more about Grand Ivy here to see why it is so successful.

In the early stage of their lifecycle, industry-focused, high-net-worth business angels can decide to invest in igaming startups and support them with capital and knowledge to help them grow operations, develop the business and definitely thrive in the sector. This is particularly true as technology and specific skills are involved.

In addition, at a more mature stage, there are several cases of investment activity from strategic backers, mainly established companies, which back other businesses in order to continue to expand their operations in several directions. This can happen for different reasons, such as:

  • adding talent to the team;
  • adding front-end and middleware technology and assets to their own stacks;
  • adding new users to their own platforms;
  • improving the business activities;
  • creating present and future synergies by either continuing to develop existing solutions or creating brand new products following new market predictions and trends; and
  • acquiring gaming licenses.

In the same way, a company can also decide to acquire all of the shares of another business it they think they can improve their overall activity as it happens in almost every industry.

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