US Sports Betting Startups: 55 of the Biggest Innovators – Business Insider

The US sports-betting boom has given rise to a robust startup community that's innovating on everything from the bets gamblers can place in a game to the way they cash out their winnings.

Companies like the fantasy-sports platform Underdog Fantasy, microbetting startup Simplebet, and gaming platform Players' Lounge have scored splashy investments from the likes of entrepreneur and Dallas Mavericks owner Mark Cuban, influencer and boxer Jake Paul, and rapper Drake, respectively. Other prominent VCs have backed"picks-and-shovel companies" that supply the technology and infrastructure underpinning the betting experience.

In 2021, Pitchbook tracked 44 venture-capital deals totaling $700 million in US sports betting as of late December. That was up from 32 deals worth less than $200 million the year before.

Insider spent six months compiling and analyzing information on companies in the US sports-betting ecosystem to build a database of startups in the industry.

Of course, it's much more challenging to be a startup today than it was even six months ago.

Venture capitalists are getting more cautious as public-market valuations plummet and inflation rises. Layoffs have also started to spread across early-stage tech and media companies, from the creator startup Cameo to the media brand Wave Sports + Entertainment.

In sports betting, it's getting harder for startups with unproven founders and high burn rates to raise money, and valuations are being recalibrated, two industry investors told Insider.

That said, the public online-gambling companies like DraftKings and Penn National Gaming have not yet been as impacted by inflation as other businesses, like tech and media companies, that rely heavily on advertising. And investors haven't shaken their longterm prospects for the industry, as sports betting continues to expand into more states and reach new audiences.

"Gambling startups are definitely facing a challenging funding environment," said Chris Grove, an angel investor and cofounder and CEO of American Affiliate. "The thing that is likely helping to protect online-gambling startups from maximum pain is the fact that the broader industry still has a very clear growth trajectory, and frankly has very clear sets of needs and wants that are unlikely to be fulfilled by the current roster of operators and suppliers."

The result is outsized demand for the hottest startups on the scene, to the point where founders are rethinking the size of their funding rounds and the amount of ownership control they're willing to give up. Others are trying to raise as much money as they can to give themselves a buffer amid the economic uncertainty.

"It's a very had time to raise money as an inexperienced founder without traction and some semblance of product market fit," said Lloyd Danzig of Sharp Alpha Advisors, which invests in early-stage sports betting companies. "But it is a great time if you are a profitable, cash-flow-producing company with great investors on board that are enthusiastic about your management team."

Some investment firms are funneling even more resources into their portfolio companies. The Toronto-based firm Cardinal Sports Capital partnered in April with New York's Hot Paper Lantern Digital Sports on a $100 million accelerator program designed to help startups make the connections needed to raise more capital and build their brands, marketing strategies, and more.

The startup landscape surrounding sports betting is vast. Insider organized its database in six categories including:

We received recommendations for dozens of startups to consider from angel investors, venture capitalists, industry consultants, and other experts. Many of the companies provided Insider with details on their businesses, such as total funding raised, key investors, and number of employees. And Pitchbook shared with Insider a list of startups in the US online-gambling and sports-betting space that had raised the most venture capital money through the end of 2021.

Insider winnowed the database down to about 50 companies that had raised at least $1 million and demonstrated a focus on the US sports-betting landscape. We strove to include a range of businesses, including various sports betting, fantasy sports, and online gaming platforms; the picks-and-shovel data, tech, and other suppliers; and other businesses working closely with the industry such as media brands and affiliate partners.

The information in the database was largely provided by the companies, and checked against Pitchbook and media reports. The handful of estimates in the database were derived from Pitchbook.

Note: Insider will update this database periodically. Email arodriguez@insider.com to submit updated information.

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US Sports Betting Startups: 55 of the Biggest Innovators - Business Insider