Edition 18: GeoComply Profile
What the Canadian geolocation service unicorn brings to the table
Happy monday and welcome to Edition 18 of The Handle!
On the eve of NBA season (the undisputed greatest time of the year), we’d love to share with you a bit about what our friends over at Underdog Fantasy are offering for NBA season. Underdog’s Small Ball II closes Tuesday, 10/19 at 4:54 pm CT so head over here and check out UD’s basketball offerings.
This week we’re profiling the gaming geolocation service unicorn, GeoComply Solutions, which is growing rapidly as an industry-leading innovative B2B solutions provider. Now, let’s dive in.
What is GeoComply?
Founded in 2011 by Anna Sainsbury and David Briggs, GeoComply’s product is used by providers to ensure clients are placing bets legally through geolocation-based fraud detection software. Their proprietary technology checks hundreds of data points to locate players and ensure transactions are taking place in accordance with local regulations.
GeoComply fights VPNs and proxies to verify a bettor's true identity, boasting 99.6% accuracy in VPN detection.
Why do we need GeoComply?
As anyone who remotely follows the news knows, Facebook (and basically every other app) tracks their customers’ locations without a fancy Software as a Service (SaaS) solution like GeoComply. Most of the legal books are dripping in cash, why can’t they just implement software similar to any other app to make the determination on whether a bettor is in their legal jurisdiction?
Without getting too far into the legal weeds, the difference is in the purpose of the location service attached to the app. Other apps are not legally required to verify location prior to use of the service, rather the apps collect the location to improve their service (and make their advertising data more valuable). In the case of sports gambling, the current laws mean that before a bettor can place a bet, they must prove they are in the jurisdiction where the bet is legal. This requires a far higher level of precision than the default solutions used by other apps. Sportsbooks cannot legally have their location services tricked by proxies if they hope to stay in the good graces of regulators.
As a result, they need a far more robust solution that is able to defeat proxies and ensure legal compliance, rather than be used for advertising data. This is where GeoComply comes in. As mobile gaming becomes more and more popular, GeoComply will continue to support sports betting and increase in volume and notoriety as a power player in the space. On a related note, if at some point licenses moved to being national rather than being regulated by the states, the importance of GeoComply would be greatly reduced.
GeoComply’s Backers & Customers
Private equity giant Blackstone Growth and Atairos Management made minority investments in the Canadian cybersecurity firm at a rumored $1 billion valuation earlier this year. The first institutional investment in GeoComply demonstrates the future potential of GeoComply and a lucrative “bet” on the importance of risk protection and digital trust growing in unison with the gaming industry.
GeoComply has a multitude of sportsbook operator clients and, according to Matt Rybaltowski of Sports Handle, earns anywhere from two cents to four cents each time it conducts a geolocation check. Clients include DraftKings, FanDuel, BetMGM, PointsBet, Caesars, Amazon Video, and many more.
The Power of GC’s Data
GeoComply has access to a significant amount of gaming data, now boasting a dataset of 2 billion transactions per year across their product suite. Through the first four weeks of NFL season, GeoComply has tracked transaction volume more than doubling last year’s numbers, up to 330 million transactions across 18 states (up 122% YoY from 2020).
GC has access to a massive dataset of sports bettor information, and data tells the story of the advent of newly legalized sports betting options slowly eradicating the black market. GeoComply has the ability to monitor and analyze betting patterns in real time to truly understand consumer behavior at a high level. Seamlessly integrating their softwares allows operators to focus on optimizing player experience for their full suite of gaming products and expand their secure, anti-fraudulent user base.
GeoComply has benefited immensely and thrived in the sports betting location compliance ecosystem due to a superior product and established role as a reliable market leader. From an operational perspective, once in place in a market the switching costs of moving on from GC are relatively high. GeoComply’s software is installed on 400+ million devices worldwide with 3+ billion transaction volume each year. With their software already in place in many states and for many operators across the country, GC has significant staying power and market access for years to come.
So what’s next for GeoComply?
IPO
Following the aforementioned private investment round, GeoComply said an IPO is at least two years away. Taking on private capital rather than heading down the SPAC route of DraftKings and Genius Sports bucks the industry convention of angling towards public markets. Data provider Sportradar went public via IPO following SPAC negotiations this past summer.
GeoComply CEO David Briggs told Brad Allen “SPACs are just too frothy for us. We recognize they have been great for others and do serve a valid function, but just not for us.”
We’ll be keeping a close eye on GeoComply’s potential to be traded publicly in the next 24 months, as the trend of industry leading data solutions going public seems to continue.
Acquired by big tech
This could be the perfect entry into the space for a company like Google or Amazon, through the lens of data and a SaaS provider.
A few concerns for one of these tech behemoths taking a look at GeoComply:
Is there a need to enter the gaming space?
Could an acquisition in the gaming space be bad optics for their core business?
Does acquiring a KYC company make sense and is it synergistic with their other security and compliance partnerships?
For Google, the play may be too far fetched. On the other hand, Amazon could make sense here and would be dealing with a familiar face.
Amazon, through Prime Video, already works with GeoComply to protect their content from geo-piracy and geolocation fraud. In terms of involvement and overall embrace of sports betting, NextGen Stats powered by Amazon Web Services are being used by the NFL to integrate fourth down and two-point conversion analytics into broadcasts every week. Amazon has experimented with DFS-style gamification features in their Twitch and Thursday Night Football live streams.
Listen, I know just as well as you that AWS makes up such a massive portion of Amazon’s revenue and people have been calling for it to spin off of Amazon’s core business for a few years. With AWS already involved in sports data and Amazon bidding on live OTT streaming content in the coming months, a play into sports betting on the B2B side could make sense. We aren’t saying you’ll be able to place a bet with one-click on Amazon Prime Sportsbook, but M&A involving GeoComply wouldn't be the craziest thing we ever heard.
GeoComply has raised hundreds of thousands of dollars toward combating problem gambling and their service inherently positions them to push bettors to bet legally. Being a leading SaaS company in the space with “unicorn status”, they could be ripe for Amazon acquisition down the line.
Miscellaneous Recent Consumption
Press
Sharp Alpha Advisors (CEO Lloyd Danzig featured last week) raised $10 million for a sports betting fund. Sportico with more here.
Caesars Sportsbook has made waves in content hires this year with former ESPN employees Trey Wingo and Kenny Mayne. Who’s next? Front Office Sports reported they may look to pursue ESPN’s NFL insider Adam Schefter upon his deal expiration next Summer (2022). Read more here.
Pro Football Focus has entered into an exclusive relationship with PA-based SportsDataIO to provide statistics and odds data. Read the press release here.
Bally’s is looking to follow up on their purchase of U.K. gaming operator Gamesys with a focus on fan engagement, according to Front Office Sports. More here.
Fresno State basketball players Haley and Hanna Cavinder partnered with Sleeper in the first fantasy spots x NIL deal. Read the press release here.
Twitter
Pods
This week’s Circles Off Podcast featured pro sports bettor Matt Buchalter (@PlusEVAnalytics) for a discussion on Kelly Criterion, CLV, Crypto and more.
This week’s Gamble On Podcast dives into Florida, Georgia, record September handle, NFL picks, bidets and more with SBHoF inductee Joe Brennan Jr and US Bets.
New Props and Hops Pod season kicked off strong with an interview with Porter (@MLBksPSYCHIC)
Opportunities
Check out GeoComply’s career page here. They’re offering roles at their offices in Vietnam, Canada, Ukraine, and Las Vegas. A few key stats about their workplace.
42% of employees are women.
50% of women serve in leadership roles.
6+ diverse languages spoken across employees.