Set for launch in the first half of the new year, BetDEX combines the latest blockchain technology with sports betting, with the aim of “transforming the consumer sports betting experience”.
Former FanDuel co-founder and chief executive Nigel Eccles becomes the new venture’s non-executive chairman, Varun Sudhakar is appointed its chief executive, and Stuart Tonner takes up the role of chief technology officer.
BetDEX plans to scale the business from a base in Scotland and is now hiring for a range of positions.
The bumper $21 million (£15.6m) seed investment round is led by San Francisco-based crypto investment firm Paradigm and Bahamas-based cryptocurrency exchange FTX, which was recently valued at some $25 billion.
Multicoin Capital, Hack VC, Lightspeed Venture Partners, Sino Global Capital, Solana Ventures, and Everblue Management also participated in the funding round.
Eccles co-founded FanDuel in 2009, with the company going on to become Scotland’s first $1bn-valued start-up, or “unicorn”, before being acquired by Flutter in 2018. FanDuel is now estimated to be worth around $30bn.
Sudhakar, who began his career in investment banking in Silicon Valley, worked alongside Eccles in senior strategy and corporate development roles at FanDuel between 2015 and 2018, before going on to senior executive positions at other venture-backed start-ups in New York.
Tonner was the first engineer hired by FanDuel, spending more than eight years with the company, building the company’s core platform and scaling it to tens of millions of users.
Eccles said: “Blockchain technology is set to revolutionise 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 energised to have the backing and wealth of expertise that comes with having Paradigm and FTX as cornerstone investors.”
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. Winners will always be welcome on our protocol.”
Sam Bankman-Fried, chief executive and founder of FTX, said: “We are thrilled to be backing a team with deep industry expertise to transform the sports betting experience.
“It is mind-boggling that more sports wagering does not occur on exchanges - we firmly believe in giving consumers the ability and control to set their own price and are excited to partner with BetDEX to bring this vision to fruition.”
In 2020, the global sports betting market was valued at $203bn and is forecast to grow to $350bn by 2024. BetDEX said it has been characterised by incumbents charging high fees and delivering minimal product innovation.
The new venture aims to take a different approach, with a protocol built on public blockchain Solana.