Reddit co-founder invests in sports betting app Wagr
Reddit Inc. co-founder Alexis Ohanian is leading a $4 million seed-funding round for the sports-betting startup Wagr, an app looking to wed social media with a fast-growing corner of the gambling market.
Founded in April 2020, Wagr has a gambling app that allows fans to bet on sports with friends instead of casinos. The company’s plan is to create a social platform that doesn’t require betting knowledge and expands the market for casual wagers.
“It’s about productizing what already goes down in everyone’s group chat, which is wagers between friends about sporting outcomes,” Ohanian said in a telephone interview. “Right now the way these get resolved is through a Cash App payment or a Venmo payment on Monday, and surely we can do better.”
Ohanian is investing through his firm, Seven Seven Six. The funding round is also backed by Greycroft, Pear Ventures, Tinder co-founder Justin Mateen, and Brad Martin, former chairman and chief executive officer of Saks Inc.
Gary Loveman, the former CEO of Caesars Entertainment, is an adviser to Wagr.
The company is looking to grab a share of the market that DraftKings Inc. and Flutter Entertainment Plc’s FanDuel have carved out while attracting more casual gamblers.
“Our app really strips down the betting experience to the bare essentials—we’re launching with point-spread bets only,” Mario Malave, Wagr’s founder and CEO, said in a phone interview. “From a user’s perspective, all you have to do is pick a team, decide who you want to bet against, and select how much you want to wager.”
Wagr believes consumers will be willing to pay a platform fee in order to have access to a one-stop service that handles the odds, payments and smack talk. It expects to charge fees in line with what traditional casinos take and has pending license applications to operate in Tennessee and Virginia.
Goldman Sachs analysts estimated in March that the total addressable market for online sports betting in the U.S. is about $30 billion. The COVID-19 pandemic accelerated some state legislation to legalize online betting, and consumers who were stuck at home took to gambling in place of more traditional entertainment.
When the app launches, it will initially offer major sports, with gamblers able to take either side of a point spread bet with a friend, family member or member of their community who’s willing to gamble. While the company expects to eventually launch prop bets or money-line wagers, the initial focus on point spreads is in part because they “lend themselves very well to the peer-to-peer model because they’re 50/50,” Malave said.
If a user can’t find a friend who wants to take a bet, the app will aim to match the gambler with someone in their state who does. Wagr plans to impose a $500 limit for a single bet and will allow users to restrict their own use.
“Ultimately, it’s to create a healthier approach to gambling,” Ohanian said. “It’s frankly the perfect time for a business like Wagr to come in and want to build something that really disrupts the way that sports betting has traditionally been done.”
Subscribe to Fortune Daily to get essential business stories straight to your inbox each morning.