BetHog CEO Eccles: ‘Crypto Is The Opposite Of What A Lot Of People Think’

If Nigel Eccles believed in moving cautiously, coloring within all the lines, and respecting every piece of red tape, then a certain company that achieved a $31 billion valuation at time of purchase this past summer might not exist today.

That company is FanDuel. The Northern Ireland-born, New York-based Eccles was one of its founders. Flutter Entertainment took over 100% ownership of the company in July for a price that resulted in the valuation spelled out above.

Eccles stepped down as CEO of FanDuel in late 2017, but it was the attitude of him and his fellow founders at the outset of the 2010s that charted the course for a staggering gambling business success story. FanDuel was among the companies that spotted and took advantage of a loophole created by the Unlawful Internet Gambling Enforcement Act of 2006 — passed 19 years ago this past Monday — to popularize daily fantasy sports. While the legality of the DFS sites they created was frequently challenged, Eccles and others plowed forward anyway.

This approach is relevant again with regard to the latest venture from serial entrepreneur Eccles — whose LinkedIn page is filled with one “CEO and co-founder” job description after another. He and fellow FanDuel co-founder Rob Jones launched the crypto casino and sportsbook BetHog some 11 months ago, motivated in part by a desire to innovate — regulated status in the U.S. and U.K. be damned.

“The crypto casino space is big; it’s probably about $10 billion in revenue. So that was attractive to us,” Eccles explained initially when asked recently on the Casino Reports podcast Low Rollers why he chose to start a crypto casino.

But then he dug into the “why” that went beyond the obvious financial opportunity:

“We felt that we could innovate a lot on product, which was really important to us. … Being in those markets that are more lightly regulated means you can innovate much faster, so we could go from inception — like we have this idea of a product, we can very rapidly go into development, and we can launch it — whereas in a regulated market that’s a much slower process. And so what we want to do is to really perfect the products in … these lighter regulated markets. And then once we are at more maturity, then we would look at the more regulated market.”

BetHog’s latest innovation is the world’s first AI-powered blackjack dealer. Eccles said he’d like to eventually bring it to regulated U.S. iCasinos, “but the way to get there is to really prove the product in the international markets first.”

How long until U.S. adopts?

At present, cryptocurrency is not widely accepted for use in regulated U.S. gaming.

It’s allowed for online sports wagering in Wyoming, and in Colorado and Virginia, operators are permitted to take cryptocurrency deposits as long as they are first converted into legal tender through a payment-processing partner. None of these is a regulated iCasino state, though, so this opportunity to deposit using crypto is only relevant to mobile sportsbooks.

Eccles is optimistic that will change but not on a terribly immediate timeline, saying that because state gaming commissions tend to be conservative and deliberate, widespread use of crypto in regulated gaming is probably three to four years away.

“The U.S. is leaning much more into crypto. The change in administration last year has had a dramatic effect on crypto in general,” he said, in recognition of the Trump Administration having ties to crypto companies and supporting their growth.

Eccles said that the lack of opportunities for licensed operators to take crypto deposits “to us is crazy. … Crypto is the opposite of what a lot of people think.” He noted the common perception tying cryptocurrency to money laundering. “It’s a horrible thing for money laundering,” Eccles countered. “It’s a horrible thing for funding terrorism. Because it’s completely traceable. Whereas … the best [currency for money laundering] is cash.”

He continued: “Also, the benefits to the casino are measurable because the costs are so low. Like, if FanDuel and DraftKings are paying something like 15 percent of revenues in payments, [BetHog doesn’t] pay anything. We don’t have to pay anything. We just put up an address, user sends us crypto, and it’s in our account. There’s whole classes of fraud that we don’t have to deal with.”

A touch of gray

Whatever one may think of black markets and gray markets and the risks for customers in gambling in them, Eccles believes — partly through personal experience — that they play a vital role in the gaming ecosystem.

“What I’ve seen,” he said, “is innovation in the U.S. gaming market nearly always comes from outside the gaming market. We had, us, 2009 to 2017, DFS — that was outside the market. We had DFS 2.0, PrizePicks, Underdog — again, outside the market. And now we have sweepstakes and prediction markets — again, outside the market.

“It’s a little depressing that there isn’t regulatory framework … that actually protects consumers but also promotes innovation. It sort of seems in this market that [innovation] can only really happen outside of it. And then … the regs try to catch up to deal with what’s actually happening.”

Waiting to catch up has never been Eccles’ style, though. That was true when he first worked in the prediction market space in the early 2000s. It was true with FanDuel. And it’s true now with BetHog, which he hopes will eventually come to the U.S. and U.K. But he won’t be sitting on his hands while he waits for that day to arrive.