Peer-to-peer betting app Lucra Sports is raising $10 million in a venture capital funding round led by James Pallotta’s Raptor Capital and including participation from sports-tech focused SeventySix Capital and Milwaukee Bucks co-owner Marc Lasry.
Lucra is a social networking-type sports betting app that allows friends to place bets with each other on individual athlete performance. For example, on Tuesday a Lucra user offered to wager $100 that Giannis Antetokounmpo would score more points in last night’s NBA slate than LeBron James.
Lucra had a soft launch in September and is now available in 37 states. Peer-to-peer betting on individual athlete performance is considered a game of skill and therefore sidesteps some of the regulation required in the $131 billion sports betting market.
“What excites us most, though, about Lucra’s approach to wagering is that it not only offers a new way for sports fans to engage with the games they’re watching—particularly when it comes to in-game micro-bets—but it brings in a new audience who maybe haven’t previously engaged with traditional sportsbooks or casinos,” Raptor Group’s Anthony DiSanti said in an email. “To watch Dylan and his team deliver month-on-month organic growth of over 20% has been particularly impressive, and we think that with marketing spend in 2022, they’re perfectly set up to scale.”
Raptor led the $1.6 million seed funding in Lucra last May and leads the Series A, which will be announced later today. Two other seed-round participants, Lasry and tennis pro John Isner, are also adding to their investment this round. In addition to SeventySix Capital, new backers coming through this round include Victress Capital and NFL veteran Emmanuel Sanders. Other backers of the business include seed-round investors Julie Ertz, of U.S. Women’s National Team fame, and her husband, NFL player Zach Ertz, Mandalay Sports Media co-chairman Mike Tollin and Stanford marketing professor Jonathan Levav.
“One of the things we’re most excited about is that 85% of the capital that came in this Series A was also included in our seed,” said Lucra co-founder Dylan Robbins in a video call. “First and foremost, [the new money] is to invest in the product. This is going to be product-led growth, it is a referral-based platform.”
Robbins estimated “30% to 35% of this $10 million is going to redesign, product development, new feature growth. Once you have that base product, you want to light the fire, as we like to say, and so $2 million to $2.5 million will go to marketing.”
The rest will go toward building out staff size, legal and compliance functions and other functionality.
Unlike sports books, Lucra doesn’t offer odds or take a position on wagers, instead providing the platform and collecting revenue through a 5% fee from winners’ take. To date, 87% of users have come from referrals, an approach that Robbins believes will continue to keep Lucra’s cost of customer acquisition well below other sports betting competitors. “We think that a lot out there in the market is missing out on the social nature of wagering,” Robbins said. “A) it feels more safe and B) it increases the smack talk and the gamification. You’re much more likely to engage with a team or player when you’re dealing with someone you know.”
The social approach is part of the appeal to Raptor, which previously backed FanDuel and also held an ownership stake in the Boston Celtics. “They are going after casual sports fans, not hardcore gamblers, so their addressable market is huge, and their CAC [cost of customer acquisition] is much, much lower than the big daily fantasy sports firms,” wrote DiSanti in his email. “They’re starting out with sports, as the market is massive, and there’s nothing people are more passionate about than sport, but watching the Oscars the other night, it’s clear that in time, users should be able to wager with each other around events like the Oscars, or reality TV shows, on the Lucra platform.”