SBC News Voice of the Sports Betting Industry
This week, news broke that AI and machine learning software provider Epoxy.ai had secured a multi-million dollar investment round. The funding was led by SeventySix Capital, an existing investor in the company, alongside Andover Ventures and several other investment funds.
Following on from the funding round, Epoxy.ai Co-Founder Jason Angelides was joined by SeventySix Capital Managing Partner Wayne Kimmel to discuss how this investment will enable Epoxy.ai to significantly expand the reach of its customisable experiences.
Angelides and Kimmel highlighted some of the lessons that betting and gaming companies can learn from streaming services such as Amazon and Netflix, before outlining the ways that AI can help deliver a more elevated, personalised experience for bettors.
SBC: Congratulations on your multi-million-dollar investment from SeventySix Capital and Andover Ventures – can you talk us through your funding round and what you plan to achieve?
JA: Thank you! It’s a very exciting time for us. First, we are truly honoured to have the tremendous support from SeventySix and Andover. We share a similar vision and we both see this as a logical and strategic expansion of our business.
Epoxy.ai was founded three years ago with a mission to help transform the gaming industry by building the most advanced and adaptable AI and ML-based personalisation platforms available for gaming operators and platform providers. Demand for our services is growing quickly and we need to be able to meet that demand by expanding our team and resources – with our latest funding round from SeventySix Capital and Andover Ventures being a key platform for that.
I think this is also a wider reflection of where we are as a market right now. The demand for personalised betting is extremely topical as companies struggle for differentiation. Like e-commerce, music, video, and advertising, where personalisation is essential for success, the gaming industry is the next technology vertical that personalisation will be a key differentiator.
Historically the gaming industry has been slow to innovate, but we’re seeing dramatic growth in interest and demand in the OSB arena and the igaming space, and to service that we need to hire in key technical and operational areas. Every company hopes to be in a position where there is so much market demand, but in the gaming space it is critical to grow with, but not beyond the pace of the market. We are very excited to be executing on our plans for true expansion on a global stage.
SBC: For our readers who may not know Epoxy.ai yet, can you give us a quick pitch as to how you’re bringing some truly game changing AI tech to the betting industry?
JA: Sure – think about how AI driven personalisation has impacted the online music industry. Take Spotify as a great example of how AI works. The app intuitively begins to understand your listening styles and what you like, which in turn then feeds back suggested content to you that it feels matches your preferences. This is the same thing for betting and gaming. We’re bringing that same Spotify/NETFLIX/Amazon tech to betting.
When it comes to online, betting evolved from brick-and-mortar betting parlours. For the most part, they took the betting odds and moved them onto the web and eventually mobile devices. The issue is that for the most part global betting applications are generic. That means that they are all very similar and they do not recognise any of your personal preferences.
In fact, according to BettingHero, 38% of customers find it difficult to get to the right bets and 75% are confused as to how to navigate existing apps. We’re here to change that.
SBC: And Wayne, SeventySix Capital is certainly a well-known brand in North America. For our European readers who might know less about you, can you give us a quick overview on your status in the industry?
WK: I’d be very happy to. SeventySix Capital is all about investing in the most exciting companies across sports betting, sports technology and Esports. Great examples of these would include the Vegas Sports Information Network (VSiN), which was recently sold to DraftKings, as well as Vigtory, which was sold toFuboTV, as well as C360, which was sold to the sports & entertainment tech company Cosm, earlier this year.
When it comes to sports betting, I’m sure many readers will have heard of Swish Analytics, as well as U.S. Integrity, who are partnered with just about every major US sports league and sports book operator, as well as Odds On Compliance, whose unparalleled expertise and cutting-edge compliance technology is setting the standard in the sports betting industry.
At SeventySix, we truly believe in the convergence of tech and sports. When it comes to AI, and indeed, Epoxy.ai, I believe we’re now at the tipping point of being able to bring that technology to the masses.
I believe the betting industry now sits at a point similar to where Amazon was when it was only selling books. To say that it’s just the tip of the iceberg would be an understatement. The US is now at that inflection stage, and I have no doubt that sportsbooks integrating AI will be a gamechanger, just as when Amazon became the go to online retailer for everything many years ago.
Of course, for the betting industry, the last five years have been all about racing to get as many US states live as possible. We’re now at the stage where brands start thinking about how to serve the customer better, and I believe Epoxy.ai will be the perfect platform to do this.
Thanks to this technology, we’ll be able to deliver that same personalised form of entertainment the audience gets from the likes of Netflix and Spotify. Whether it’s your favourite team or your favourite player, sportsbook apps will intuitively know your preferences and present you with the opportunities that you enjoy.
Expoy.ai, is of course one of the leaders in this space, and we’re always looking to invest in entrepreneurs that are truly innovating across the sports betting industry. I see the opportunity to invest and work with Chris and Jason, Epoxy.ai’s co-founders, as a real pleasure. At SeventySix, we’re always looking to back entrepreneurs at the earliest of stages, helping them to grow their business as much as possible while they’re building their company.
SBC: When it comes to companies like Epoxy.ai – how do you identify value and what do you see as the major opportunity with their technology?
WK: The major thing for us is who entrepreneurs are. Much of the value lies in the chemistry between us – how much we like each other as people. Second, and this is especially the case with Chris and Jason, the major opportunity is how smart they are and the potential we believe that they have to make a real difference in the industry.
When it comes to nurturing that value, we ask, how can we help them? What can we do? Can we help them build their business? It’s all about asking what we can do to move their business forward, and we’re here to help make that happen. Whether that’s making an introduction, brainstorming, or anything else – we just want to be there for our partners and help support their success.
I also believe it’s all about strategically positioning ourselves for growth. Our portfolio is positioned across multiple verticals, which enables us to work and learn from so many different companies across different parts of the sports and betting industries. Of course, our selection criteria is very complementary, which gives us a unique position in the marketplace.
SBC: Jason, in your opinion, what’s the use-case for AI-based personalised bets for customers – how can this drive margin for operators? In five years do you believe it will be difficult for sportsbooks without AI tech to compete?
JA: Consumers have become accustomed to products that understand and adapt to their preferences. 70% of consumers expect their digital experiences to be personalised for them. This presents a huge opportunity for betting operators to create meaningful differentiation that materially impacts their bottom line. Some estimates suggest that early adopters of AI driven personalisation can expect to see 30% or greater lift in gross revenue.
The good news is that many gaming operators are recognising this as a critical need and personalisation is literally on the roadmap of most major operators right now. The benefits of increased growth, engagement and retention makes it a no-brainer, and those that get it right will reap the rewards.
When you open up a sportsbook app, just like with Netflix or Spotify, what you should get is an experience tailored to your needs. The app needs to understand your betting preferences and deliver that to you with a completely safe and engaging experience.
So, how does that work? Each customer needs to be able to log in and receive different tailored and curated content. Content that is firstly orientated towards a better customer experience, and secondly – orientated towards delivering operator profitability and margin.
With our tuneable AI, we can help our partners adjust to meet each of those different parameters. If you want increased GGR – we can do that. If you want to leverage profitability – we’re also able to do that. And of course, where we really shine is generating engagement and retention, which we do too.
The beauty of this is that it not only drives powerful and unique experiences, it’s also engaging to the user – with our goal being to work with our operator partners to meet each of their objectives.
We also need to remember another great thing about AI, it’s very good at recognising bad patterns of behaviour. Of course, this means it can be of great help towards solving problem gambling and bonus abuse. For any suspicious, and indeed, problematic patterns of behaviour, AI, by its very nature, is able to detect such issues far faster than any human can.
SBC: Wayne, from your leading position in the market – what do you see as major potential for AI-based betting in the industry and how do you see this shaping up in the coming years?
WK: It’s definitely not a sprint. Looking back at the first few years post-PASPA, we saw $220 billion USD wagered. In the last 12 months alone, there has been over $100 billion USD wagered. That’s true exponential growth. So, with more and more operators going live in the US, as well as the new NFL season kicking off, I have no doubt that numbers are about to move even higher.
Of course, this is partly due to technology advances, with a major factor being the far superior UX experience as compared to five years ago. Looking at the role of AI, it’s going to be absolutely immense in driving this further.
Let’s look at this from an access perspective. Take a fan at an Eagles game. The fan is in the stadium, and they’re being offered fully tailored bets on how many touchdowns Jalen Hurts is going to throw. We don’t even need to advertise the AI and innovation that powers this, it’s just a case of the fan knowing that they’re enjoying the fun and being delivered personalised and custom betting opportunities that enhance that experience even further.
Without a doubt, underneath all that is some really hardcore tech, delivered by some of the smartest people in the industry. After all, it’s all about presenting content in the most engaging way possible.
As we’ve discussed already related to Amazon – the tipping point we’re at in terms of industry development shows how much change is about to come. Take Apple and the iPhone. You don’t need to know how the product works; all the bettor needs to know is that they have a product that can enable magical moments designed for them.
With AI, the bets are easy and perfect, with absolutely no need to think about the underlying UX. Of course, as a sportsbook operator, the product is simple, intuitive and easy to use too – with Epoxy.ai, all you need to do is plug it in and switch it on.
SBC: In terms of expansion plans – where has Epoxy.ai got its eye on right now? What markets are going to be key for you as you strengthen your capital to expand?
JA: North America is of course a major market for us given we’re headquartered in Philadelphia; however, we have boots on the ground in the EU and are quickly looking to expand into other global markets such as LatAm, and Africa.
One thing that we have going for us is that we took great pains to make our platform services as Plug and Play, as possible which means that in many cases, we can be providing value to customers in a matter of a few weeks. This means we can be integrated incredibly quickly and scale our partners fast.
Of course, with that comes a lot of education too – a key challenge for us to dispel, is that much of the global operator and platform community still believes that integrating new tech is still incredibly difficult. Thanks to our components, this simply isn’t the case anymore – and we’ve solved that to the point where we can activate our tech almost at the flick of a switch.
SBC: Last but not least – in terms of industry transformation, how much do you see technology disrupting sportsbooks in the next five years, and how much do you think the betting industry will change?
WK: It’s all about exponential adoption. I see the betting industry changing and growing immensely in the coming years.
In line with that, we’re now reaching the stage where the industry can begin integrating the same AI tech that’s commonplace in other entertainment industries. I have no doubt that personalization is going to be one of the major disruptors that powers the next five years of exponential growth.
The market has become hyper competitive, so it’s going to be crucial to integrate technology that will stand you apart, again just look at Apple. I also believe Epoxy will be at the forefront of this given that this isn’t their first rodeo. As some might know, they’ve been in the personalization space for years, including the sale of their previous media tech venture to Comcast.
With pioneers like this now in the betting space, I believe we’ll soon see the betting industry become as personalised and AI-driven as we have for the rest of the entertainment space. It’s going to be an incredibly exciting few years ahead, and we’re excited to be part of it.
