FanDuel’s first U.S. investor is now looking to build the sports betting parlor of the future, an ambitious project that would be the largest restaurant in Philadelphia.
Bullpen Capital founder Paul Martino is among a group of partners looking to raise around $8 million to build Bankroll, a food and event space in downtown Philadelphia. The investors believe that money from sponsorships and affiliate fees—cash that operators pay for new customers—can sustain a new type of brick and mortar sports gambling business.
“This is going to be the next innovation in sports betting,” said Martino. “Now that the operators are up in running, we’re thinking: What can we do next?”
Bankroll’s investors have their sights on a 24,000 square foot space in Philadelphia’s Center City neighborhood. The group includes Martino, who led Bullpen’s 2012 investment in FanDuel; gaming entrepreneur Rich Belsky and Philadelphia-based sports media executive Marc Rayfield. Also involved is Manu Gambhir, former Chief Digital Officer at OTG Management, the company whose tech drives the kiosks and tablets at airports around North America.
Bankroll will lean on similar technology. Using the venue’s tablets, or a mobile phone, patrons will have access to the company’s app. They’ll be able to order food, collect rewards, see live odds, change channels, listen to live audio, and even place wagers through partner sports books.
Over time, Bankroll will apply machine learning to data from the app to better engage patrons. That includes understanding which customers are best for which types of offers from which specific operator.
“It’s a match-making service in some ways,” said Gambhir, who is president of enterprise business at Play Games24X7. “If we can build the tech to do that well, this has tremendous opportunity.”
The business’s core thesis centers on those affiliate fees. As legal sports betting launches in states across the country, operators are in a mad dash to acquire customers. That’s why, depending on where you live, you might be bombarded by ads for DraftKings, FanDuel and BetMGM.
Operators attract new customers via their own advertising, promotions and through affiliates, outside businesses that funnel new users their way. It’s not uncommon for sports books to pay $300 for each new customer recommended. Some even offer a cut of the money wagered by that customer over the lifetime of their betting (Martino said Bankroll would be agnostic on structure).
Bankroll’s backers view the venue as an ideal affiliate partner. They envision nightly takeovers by different operators—FanDuel Fridays, for example—where sports books bring in their own entertainment and their own promotions centered around that day’s sporting events. There will be a live broadcast studio, plus a VIP section for rewards members.
While the plan is eventually to expand to other cities, Philadelphia is a logical place to start. By population, Pennsylvania is the largest U.S. state with legal mobile sports betting, and Philadelphia is its largest city. It has franchises in all five major U.S. leagues, and sees a lot of traffic from New Jersey, another state with robust legal sports betting.
The business plan projects between $13 million and $15 million of revenue each year, of which $3 million to $5 million comes from affiliate deals, in-venue sponsorship and marketing through the Bankroll app. The rest will come from low-margin food and beverage sales. In total, Martino estimates that the group will need an average of around 500 daily customers to hit those targets.
While affiliate fees generally apply to new customers only, the group believes it will be able to monetize repeat patrons. For starters there are more than a half-dozen apps live in Pennsylvania (most people are only betting via one or two), and getting lapsed bettors to re-deposit is nearly as important to sports books as the original registration.
“Just because they signed up with you doesn’t mean they’re going to keep playing with you,” Gambhir said.
All the gambling will happen online, and through operators like FanDuel or DraftKings. Bankroll won’t be a sports book and no gambling money will change hands on premises, meaning the regulatory and legal hurdles are smaller than for sports betting operators.
All in the cost of the project will be around $15 million, financed through investment and some debt. The group is already through much of the zoning process with the city, and hopes to be open for business by the start of the 2021 NFL season.
“We didn’t set out trying to build the biggest restaurant in town,” Martino said. “We’re trying to build a next-generation entertainment place with an experience that is something between a restaurant, Dave & Buster’s and going to Parx Casino.”
(This story has been corrected to reflect Bullpen’s revenue projections in the 12th paragraph.)