Investment firms are focusing on suppliers rather than operators in the wake of tightening gambling restrictions according to Tom Waterhouse.

Waterhouse, Chief Investment Officer at Waterhouse VC, offered these insights when he appeared on the Australian business and financial news channel, ausbiz.

He said: “For the last five years we [haven’t] invested in operators. We think that operators are going through a phase of increasing regulation and taxation restrictions. It’s just becoming tighter in that environment.

“It’s an ongoing debate and it’s hard to know what the right answer is. In terms of advertising restrictions, being able to advertise entices people to be licensed in Australia and pay taxes. There’s a large grey market that services in Australia that doesn’t advertise and doesn’t pay tax.” 

The debate surrounding gambling advertisements in Australia has heated up in recent weeks as reports have suggested that the Labor government, under Prime Minister Anthony Albanese, plans to apply a watered-down version of measures suggested by the Murphy Report. 

Labor initially pledged to apply a blanket ban on gambling advertising across all media disciplines, however, it is now expected to place a cap on adverts, limiting them to two per hour. 

During his interview, Waterhouse cited the fact that only 15% of the dollars lost in Australia are in sports and horse racing, with the rest lost through land-based operators that don’t have TV advertising, suggesting that gambling advertising may not be the key issue surrounding problem gambling in the country.

He previously talked about his firm’s supplier focus when he appeared on the show to discuss greater taxation and regulations in the US market.

Waterhouse VC invest in Racing and Sports Technology

During his interview on ausbiz, Waterhouse also talked about his firm’s recent investment in the Australian Stock Exchange (ASX)-listed Racing and Sports Pty Ltd (RAS).

RAS is a leading provider of data, enhanced content and software-as-a-service solutions to the racing and wagering industries. 

On the decision to invest, Waterhouse said: “They understand racing really well and we’re a firm believer that racing plays a large part in the global gambling space. Racing is a terrific gambling product. It’s a much higher margin than sport and it’s on all the time. There are plenty of places that don’t allow online gaming and you need a constant product. Racing is a mature product but it has a lot of growth left in it.

“Racing is much more complicated than sport because you’ve got all these different variants. You can have trifectas and first fours, it’s not just who’s going to win that sporting match. To have a company that deeply understands how racing works and has been able to create a betting engine and have unique data, we think that’s an interesting proposition for a lot of operators.”