Sports betting innovator launches new start-up

One of Scotland’s most successful technology teams is starting again with a new firm – and has secured the biggest initial investment of any British start-up company.

BetDEX is being led by Nigel Eccles, who co-founded fantasy sports betting website FanDuel in 2009 in Edinburgh.

The new firm has seed funding of $21m.

It aims to launch a new open source software platform, on which others can innovate in sports betting, in the first half of next year.

The company is recruiting staff from a base in Scotland.

FanDuel was sold to Flutter – formerly named Paddy Power Betfair – in 2018 and is now worth more than $30bn.

However, Mr Eccles and other co-founders are in legal dispute with FanDuel’s later stage investors over the way in which they structured a takeover, which left the Edinburgh team without a share of the rising valuation.

Mr Eccles said that one thing he learned from the FanDuel experience was to choose investors carefully.

He told BBC Scotland: “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 $21m seed funding for BetDEX includes stakes taken by seven backers of US technology firms, including two large funds – Paradigm and FTX – which specialise in investing in companies operating with crypto-currencies.

Varun Sudhakar, chief executive of BetDEX, 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.”

As chairman of the new firm, Mr Eccles said it could look familiar to retail punters used to existing online firms.

However, he says that those who use its platform to run their own betting firms will be able to innovate and create a wider range of betting products.

He said the typical share taken by online bookies is 7% to 10% of a stake, but BetDEX should allow for that to fall below 1%.

The company will develop its own betting apps to operate on the platform.

Mr Eccles said these would take an “intelligent, thoughtful” approach to the way they are marketed to protect those who struggle with problem gambling.

He said the team of around 500 software engineers who helped build FanDuel from Scotland showed that it remains the place to build a firm. BetDEX has the same head of technology, Stuart Tonner.

“A lot of that [FanDuel] success was built on a highly skilled, very talented engineering team, that built this product that could process millions of bets and millions of users.

“There’s a real talent pool of experienced engineers who helped us build our product and that’s what we want to leverage for BetDEX as well.”