Nigel Eccles, who was one of co-founders of the fantasy football platform FanDuel is working on a new venture. Along with a highly innovative Scottish team, he has launched a new sports betting platform called BetDEX. He has a great track record for innovating in the world of online betting and this new initiative has attracted substantial interest from investors and media alike.
BetDEX sees Eccles Start Over
Not everyone gets to start over when their extremely successful technology firm finishes up outside of their control. However, that is precisely what Nigel Eccles and his team are up to. BetDEX has secured seed funding of $21 million – the biggest initial investment of any UK startup. It will create an open-source software platform for other innovative teams. BetDEX is Based in Edinburgh and is recruiting its staff base from Scotland. BetDEX co-founders are Nigel Eccles, Varan Sudhakar, and Stuart Tonner.
The Team Behind FanDuel
In 2009, Eccles co-founded FanDuel in Edinburgh. It started out as a fantasy sports betting website. In 2018, FanDuel was sold to Paddy Power Betfair (which now trades as Flutter). FanDuel started life as a specialist fantasy football platform but has diversified considerably and is now a fully integrated sportsbook platform and a Pennsylvania online casino. The business is now estimated to be worth more than $30 billion.
However, the way in which the takeover was structured left Eccles and the original team shut out of the profits. As a result, they are in a legal dispute with the later-stage investors. The Edinburgh team did not get a share of the rising valuation from the 2018 sale, and the trading terms were stacked against them.
Cut Out of The Profits
Before the sale, FanDuel had been making heavy losses and had gone to private equity investors to keep it going. The private equity interests had taken control of the board. Then, in 2017, the Federal Trade Commission in America prevented a merger with DraftKings. The founders owned 40% of the company, valued at $1.2 billion. When this deal fell through, the Flutter deal was approved. They paid $158 million for a 58% stake in the business. The shareholder agreement said private equity investors had to be paid back first. Nothing was left for the original team and staff who had built the company. The minority shareholders (the management and founders) could not hold out on the deal, which is known as a ‘drag along agreement.”
Proceeding With Caution
In an interview, Nigel Eccles told BBC Scotland that the experience meant that he was now conscientious about who he allows to invest in his business.
“We took a lot of lessons from that, one of which was the importance of who we pick as investors in this new business, to ensure their values are aligned with ours, that they take their fiduciary duties responsibly, and that they’re the right partners for us.”
The seed funding for the new ventures is backed by investors who already back US technology firms. Two of the investors are large funds, Paradigm and FTX.
Why is BetDex Different?
The chief executive of BetDEX, Varun Sudhakar, said.
“The sports betting industry charges high prices for poor products and limits trades by its most successful users. BetDEX is diametrically opposed to this approach. We will successfully compete against incumbents with a markedly superior product and low fees, which is now possible with the advent of the blockchain technology.”
The global sports betting market is forecast to be worth $350 billion by 2024. It was already worth $203 billion by the end of 2020. According to the BetDEX team, the market is characterized by the incumbents charging high fees but delivering little product innovation. They say that they intend to take the opposite approach. They are building their protocol on the public blockchain Solana which will enable them to offer customers low-cost trades and extremely high speeds. In addition, the protocol will be decentralized and open-sourced. This approach means that third parties can build their own applications and innovate on top of the BetDEX platform. Wagers will be accepted in USDT, SOL, and SAMO.
Eccles, Co-Founder and Chairman, said in a press release.
“Blockchain technology is set to revolutionize sports betting, and we want to be at the forefront of that. It’s exciting to be founding the business with Varun and Stuart and to be building it in Scotland. We are energized to have the backing and wealth of expertise that comes with having Paradigm and FTX as cornerstone investors”.
What is Solana?
Solana is similar to Ethereum but is often referred to as an Ethereum killer. Like its rival, Solana can be purchased on most major exchanges. However, the token’s real value is that the Solana network has unique advantages. Most early cryptocurrencies use a proof-of-work algorithm to define the blocks in their chain. This mechanism relies upon miners to determine what the next block will be. Instead of this, Solana uses a proof-of-history consensus mechanism. The Solana algorithm uses timestamps to define the next block in the chain.