Underdog has acquired a sportsbook platform as part of a long-term plan to move into sports betting.
Known for its fantasy products, the operator announced Wednesday it acquired technology firm Goat Gaming.
Underdog co-founder Jeremy Levine said Goat would provide the backend technology for Underdog as it built out a full-stack sports betting platform.
Who is Goat Gaming?
Goat has staff in the UK and Ukraine. Its back-end technology includes:
- Player account management (PAM) platform
- Trading and risk
The deal was primarily equity, with Goat Gaming owners receiving shares in Underdog.
Following the transaction, Goat CEO Stephen Taylor-Matthews will become GM of sports betting at Underdog. Prior to Goat, Taylor-Matthews worked in executive positions for Amelco, Stats Perform and Genius Sports.
Underdog eyes innovation
“As an industry, sports betting has been terrible at building product and innovating,” Levine said. “Product teams are set up to integrate third party feeds and launch in new states rather than build quality product. That is what we do best.”
Levine said Underdog’s target customers were already playing fantasy, sweepstakes and survivor pools, as well as betting.
“We want to bring that all under one brand with one wallet,” Levine said.
Underdog’s sports betting plan
Underdog is planning to launch three main products following the acquisition.
- A live betting game built around micro-markets
- Betting games like March Madness brackets, survivor pools, Super Bowl Squares and Pick ’em pools
- A more traditional sportsbook product
US sports betting unique opportunity
Taylor-Matthews said US sports betting marked a unique opportunity because customers were still relatively new and therefore willing to try new concepts.
“I think there’s real innovation to be achieved,” he said.
He highlighted live betting and prop betting as key opportunities.
Fantasy to betting a well-traveled path
Underdog’s pivot into betting is not surprising. Investors have poured money into fantasy operators in recent years because of their sports betting potential. Underdog itself has raised $15 million to date.
- Dallas Mavericks owner Mark Cuban
- Former Paddy Power Betfair CEO Breon Corcoran
- Former Caesars CEO Mitch Garber
- Gaming-focused research firm Eilers & Krejcik
Why fantasy is a good bet
While sports betting is still limited to around 40% of the US population, paid fantasy is widely available. As a result, fantasy firms have a head-start in acquiring future sports betting customers.
As Levine told LSR last year: “When sports betting opens in California, we’ll have 30,000 users. And every other sportsbook except FanDuel and DraftKings will have zero.”
Underdog had 50,000 paid customers in August alone, Levine said.
The potential opportunity is large. Last month, Penn National acquired theScore for $2 billion, a 111-x revenue multiple, in large part for theScore betting technology and customer base.