It doesn’t take a Google search to discover Paul Martino’s roots or a deep dive on social media to find out where his loyalties lie.
Just ask what his favorite team is.
“The Philadelphia Eagles and whoever is playing the Dallas Cowboys.”
The Doylestown, PA-based founder of Bullpen Capital relates to the passion of Philadelphia sports fans. But perhaps even more fiery than his fandom is his foresight, knowledge of the gaming vertical and “first one in the pool” mentality.
As FanDuel’s first US investor, Martino has lofty expectations for sports betting in Pennsylvania. In the next few years, he expects Pennsylvania and New Jersey to compete for the highest monthly sports betting handle. Of course, keeping an eye toward what’s next, Martino is an investor in Bankroll, which is being billed as “the sports betting parlor of the future.”
Martino’s easiest “yes” went to FanDuel
Martino earned his BS in mathematics from Lehigh University in Bethlehem, PA. He then got his master’s in computer science from Princeton University.
Martino is the founder of four companies, and his early online gaming innovations in multiplayer user experience from almost 20 years ago are the inspiration for several of the modern social gaming offerings. Also, he is the holder of over a dozen core patents covering social networking and big data.
Before forming Bullpen Capital in 2010, he was an active angel investor and personally invested in the first rounds of Zynga, TubeMogul and uDemy. Bullpen Capital’s key investments include Ipsy, SpotHero, Classy and FanDuel.
Martino, who plays poker and bets on sports, was intrigued by the then DFS-only company. At the time, it was making about $1 million a year, with only 10,000 users.
“In the early days of apps in 2011, 2012, if you were making $10K, you were doing good,” Martino explained.
He talked to FanDuel’s founder Nigel Eccles, who said they had been turned down by about 70 other venture funds. Those investors were turned off by the idea of a husband-wife team from Scotland who didn’t know much about American sports. And, since it was pre-PAPSA, possible investors were worried about regulatory approvals.
“This was the easiest investment I will ever make in my life,” Martino said. “I looked at his numbers, and his business was on fire. I haven’t had a deal that easy since then. It was the easiest deal I ever had to say yes to.”
FanDuel is tops in PA
The FanDuel Sportsbook app, through its partnership with Valley Forge Casino, arrived in Pennsylvania in July 2019. Since August 2019, it has led all operators in terms of handle. August 2020 marked the only month it did not finish tops in revenue, as DraftKings slightly edged it with $1.9 million compared to FanDuel’s $1.4 million.
Since launching in PA, FanDuel has taken $1.1 billion in bets and generated about $50 million in revenue.
In August 2020, FanDuel took 45% of all bets in PA. The much-anticipated Barstool Sportsbook app recently entered the PA market, bringing the total number of sportsbooks to 10. Does Martino expect FanDuel to hold the large market share (40-50%) of the sports betting action going forward?
“It would be remarkable for the company to hold market share of that size in the state,” he said. “What’s amazing to me is out of the gate, FanDuel and DraftKings’ combined share in the state is as high as it is. With Penn National buying Barstool, William Hill making a concerted effort and the local casinos like Parx, I would be surprised if it could hold that market share. But as an early investor, I’m thrilled it got out to such a strong lead.”
Innovation in sports betting
Since the US Supreme Court overturned PAPSA in 2018, Martino mentioned in various articles that he was frustrated by the lack of innovation in sports betting:
“It was all derivative.”
However, he noticed a shift in early 2020. He started to see some fantasy/betting formats and products directed at under-represented demographics like African-Americans and female users.
“The stuff I thought I was going to see in 2018 is now being pitched to us,” he said. “They are really innovating new game formats, and I think we are finally going to make a couple investments after sitting out for a few years because it was all copycat stuff.”
Why the delay?
Martino says that after PAPSA, the next few years were about setting up brick-and-mortar and apps.
“In that mad dash, all innovation was lost. It was about who could get to market first, who could copy what European operators were doing as fast as possible. It just seemed like it was a natural cycle. You had a year or two where everyone gets to parity, and once that happened, you could start thinking about what’s next.”
Bankroll answers “What’s next for sports betting?”
So, what’s next?
For an entrepreneur like Martino, that’s not just a question, but a bet, a mission statement and a challenge.
In late August, it was announced that Martino was part of a group of investors looking to raise $8 million to build Bankroll, a 24,000-square-foot sports betting parlor/restaurant in Center City Philadelphia.
“This is going to be the next innovation in sports betting,” Martino told Sportico. “Now that the operators are up and running, we’re thinking: What can we do next?”
Marc Rayfield, one of Martino’s partners and a former CBS Radio New York and Philadelphia market manager, told the Philadelphia Business Journal, “We want to make Philadelphia the sports betting capital of the US.”
On his LinkedIn, Rayfield posted:
“Bankroll is a first-of-its-kind tech-based sports betting venture that we hope to scale across the US. I am fortunate to work with a super-smart group of partners who are committed to creating a unique and amazing customer experience for sports bettors and nongamblers alike. We think of it more or less as ‘Apple meets the sportsbook!’”
Next wave of innovation: Enter Bankroll
A venue like Bankroll couldn’t work last year when online sportsbooks were just arriving in Pennsylvania. But now, with 10 sportsbook apps in the state, Martino and his fellow investors believe it’s time for what’s next.
“Now the fun is going to show up,” said Martino. “We are now going into the next wave of innovation, where it’s not just going to be casinos opening their sportsbooks. It’s going to be an integrated entertainment experience. I’m optimistic our timing might be right.”
At Bankroll, there won’t be betting kiosks or tellers. Guests who visit can bet on existing sportsbook apps. Instead, it would serve as a brick-and-mortar affiliate for operators.
The plan, says Martino, is to open Bankroll by the beginning of the 2021 NFL season. The combination of the demographics, the passion of the sports fans and the culture of sports betting makes Philadelphia an ideal spot for Bankroll.
“This could be one of the most interesting projects,” Martino said. “We could be wrong about that. COVID could get worse, and we could have made a bad bet. I would much rather be the one person trying to build an ambitious project as opposed to being the tenth person in once the water is safe. I’ve made all my money in my career being the one person crazy enough to do something when everyone else was scared.”
Martino noted that cities like Pittsburgh, Chicago, Denver and Detroit would also possibly make good homes for the Bankroll concept because of the legal framework around sports betting.
Race to the top for sports betting handle
In August, New Jersey shattered the all-time sports betting handle with $667.9 million wagered. Nevada held the previous record of $614.1 million set in November 2019.
“Pennsylvania is going to be the top sports betting state,” commented Martino. “It’s going to overtake New Jersey soon. Over the next three years, it’s going to be Pennsylvania vs. New Jersey.”
Bankroll renderings courtesy of Paul Martino/Bullpen Capital.