Omer Sattar, co-founder and co-CEO of Sightline Payments, told the Global Gaming Expo that small companies are the key to innovation, but continue to have difficulty getting funding in the gaming industry.
Founded more than a decade ago, Sightline Payments considers itself the U.S. sports betting and casino gaming market’s leading digital-payments provider and mobile-app developer.
Sattar, who moderated and spoke on the “Today’s Visionaries: A New Era for Gaming” panel Tuesday, told the audience that six to seven years ago, Sightline tried to raise $20 million in Silicon Valley and elsewhere, but struck out. They lowered their threshold to $15 million, then $10 million, then $5 million and finally $1 million. They ended up raising $700,000.
In August, Sightline completed a $244 million round of funding to become Nevada’s first fintech unicorn, one of roughly 700 startups worldwide ever to earn a $1 billion-plus valuation as a private company.
Sattar said the fear of state regulatory hurdles the industry has faced over the years, especially when it came to digital payments, made it difficult initially for people to want to invest.
But even with Sightline’s success — Sattar said the $244 million may have been the largest ever in Nevada — it was only the third largest round that week in the U.S. The largest that week was twice the size, he said.
Despite the opportunities for hundreds of tribal and commercial casinos, investors continue to be worried about overcoming regulatory challenges. Sattar noted that the difficulty of getting funding in the gaming space isn’t good for the industry, because the small companies are the innovators.
“There’s hundreds of billions of venture capital money in America,” Sattar said. “A quarter of a trillion will be invested this year. But we in the gaming industry will get less than one-third of a percent of the money coming in. We’re an industry in dozens of states that employs millions of people and we have an economic impact of hundreds of billions of dollars in America. Yet there is no capital available for innovation.”
Sattar talked about the story of his friend, Vladimir Tenev, who in 2013 founded Robinhood, which pioneered commission-free stock trades. He said Tenev once visited him in Las Vegas with no money and was “literally sleeping on my couch. He’s worth $3 or $4 billion now.”
Being outside the gaming industry, Tenev raised $500,000 in a first round of funding and subsequently $600 million. Sattar said it’s a $35 billion company today and he wouldn’t be surprised if it reaches $100 billion.
“That leaves him a valuation greater than Las Vegas Sands, Wynn Resorts, Caesars Entertainment or MGM Resorts, Red Rock Casinos, Boyd Gaming and Penn National,” Sattar said. “We can go down the list. The question is, if it’s so difficult to get money for folks to innovate in our industry, what are we supposed to do to move this industry forward?”
Hector Fernandez, director for slot maker Aristocrat Technologies, said the Australian-based company is worth more than $21 billion today and told Sattar they worry about being too big to innovate on a daily basis.
“I do agree that when you become big, it’s very difficult to innovate. You have to chase quarterly targets and they beat you up if you don’t hit the number.”
As an Australian company, Aristocrat issues earnings every 26 weeks. He said they don’t chase short-term money any longer, but look to be sustainable over the long term and are willing to take risks.
“If you don’t disrupt yourself, someone else will,” Fernandez said. “We’re only one disruption away from not having and managing this business. We’re a closed-off industry. We have to be careful not to get disrupted by an outside force.”
Fernandez said that when they think about the industry landscape, executives should be less concerned about their traditional land-based competitors and more about future competitors — “those who can enter this business and actually thrive,” Fernandez said. “We’re constantly thinking about taking on risk. You have to be comfortable that a lot of those things don’t pan out. You have a big shot on goal and realize some of those are not going to work, and the board of directors, executives, and management have to be comfortable with that.
