"Under 30s don't bet like their parents: you have to add entertainment to the experience"

The CEO of the esports and sports betting operator discusses Rivalry's recent Toronto listing, plus opportunities in Australia, Canada and the US. Salz details the keys behind the company's approach to the newer generation of bettors, and how that was integrated into Rivalry's own Rushlane game. Moreover, the executive talks about future trends in esports and sports, and how younger consumers want more entertainment out of the experience.

Rivalry's shares have now begun trading on Canada's TSX Venture Exchange, a major step for the company. Why was this move made and why did you choose this exchange in particular?

We are based in Toronto, Canada. We understand the market, we know the investor landscape, and its dynamics. We felt comfortable. When we thought about a U.S. listing, the thing is we don't operate there currently. We might in the future, but we don't right now. And it felt that at our size, listing in the U.S. with no operations, we wouldn't get the kind of time of day from investors.

The reason why we went public is that there are two big constraints when you're private as a sports betting business. One: anyone that owns more than 5% of the company has to be on the license, and most people don't want to subject themselves to this. It can make raising money hard. And two: for new licenses and payment providers, and anything that requires a third party to become involved with your business in a meaningful way, there's a huge due diligence process because you're in online sports betting.

Being public, you can get more speed unlocked. The ownership goes from 5% to 20%. In terms of due diligence, you also can move much faster through all those processes. And now we have all this momentum, and we have raised money. It gives us so much more speed.

What are the company's expectations in its trading operations for the short term and going forward, and also in terms of adding more capital to its operations?

With the money we raised going into the listing, and even thinking of some fairly ambitious spending plans for the next year or so, we are good. The company's got about 40 million in cash, we got no debt, we generate revenue that covers a lot of our fixed costs and day-to-day costs. A lot of the money is going into growth and marketing. Pending any crazy outside event happening, we’re good for some time.

Like most companies that trade on the stock market, if the stocks start to perform well, and more people get interested, and investor banks start showing up with different opportunities, if that were to come our way under the right terms, we would probably take more money just to continue building the balance sheet. But right now, we are staying focused on our operations and building out the business the right way.

The move is also expected to allow Rivalry to pursue new market and vertical opportunities outside of its initial esports-first offering. Could you share with us further details of new markets the company will be looking to expand into?

There are two different interpretations of what constitutes a market. One is geographic: we are in gray markets under an Island of Man license, and we were recently granted an Australian license. Australia will be our first country with a regulated market. We are expecting the launch there really soon. 

Canada legalized sports betting in August and they are approaching it like the US, where you have a province by province legalization. Ontario is the largest province in the country and they have opened up a licensing process as of mid-September, and we are participating in that, obviously. We’re hearing that the go-live will be early next year so we’ll be prepared to do that as well.

Then on the markets themselves, our esports segment is really strong, and we are adding way more depth to traditional sports. We are adding things like cricket, but we are also very focused on the main sports: soccer, basketball, boxing. We are getting more resources into our sports offering, to make it as good as any of the other sportsbooks out there. And then, we are continuing to invest behind original products like Rushlane, our casino game that we built in-house.

In terms of these new opportunities surging, how does Rivalry expect to secure its presence within them? Could partnerships play a significant role there?

The way that we launched in all these markets, and it goes back to before we had raised all this money, was on our own efforts. Approaching smaller influencers, more community-based activations. In the last couple of years, our monthly measured engagement on our social properties and content became more than that of any other competitor in esports betting. We’ve built a very relevant brand, and that counts in every new market that we go into. And now that we’ve got more money as well to spend on partnerships, it means that we can continue to invest and expand our social media properties, alongside bigger partnerships, bigger influencers. Content creators on Twitch and YouTube, and esports teams, plus sponsoring events.

That’s how we’ll do it in Australia and Ontario, and even new markets: launch local social media properties, build a presence in the gaming and esports community, work with some of the biggest influencers, help to fund and sponsor some of the biggest events, or even create new events.

We find that a big part of the brand is giving back, so we sponsor, and we actually help create events, some of which we don’t offer any betting. We help up-and-coming aspiring pros get more viewership, more interest in them. We even paid for players to go to boot camps in Europe, and then set them up there. There’s no betting we offer on that; it’s just part of reinvesting back into the communities.

One of these new opportunities we briefly talked about is in Canada, where the company is based. What are your short and long-term expectations for this market that is so well known to you?

I think Canada will be interesting, because of what the regulators here chose to do, which we think was the right move. Canada is a very big gray market and always has been, and we don’t operate in Canada as a great market operator. Ontario is the biggest province, so it’s the most important of the markets. And what the regulator here chose to do is unlike some other gray markets that switch to regulated in a way in which the local regulators shut off anyone that doesn’t have the license. Here they are going to allow people to continue operating gray, and not really go after them. It’s going to be hard to operate over time, but they can continue to do so. We think the competitive dynamics here are going to be a little odd. It’s probably going to look a lot like it does right now.

What we find with Rivalry is every market we go into, we don’t bump into our competitors that often. They’re all kind of going toe-to-toe marketing, looking for sports bettors in the typical channels. All the markets we’re in are very competitive, but we find that places we go, and the channels we use, are very underutilized, or not utilized at all. And it works really well for us. So we’ll continue to do that in Canada.

The good thing about being here is that we have such a good cultural understanding. I think the flavor of our marketing and the types of influencers we use might be a little wider in scope. We might go for a city-specific influencer that we know because we follow them on Instagram, and we think they’re hilarious, and interact with them. We have a really good understanding of super targeted influencers. Not even necessarily gaming influencers; just personalities that are relevant and that we know would work for us. 

In regards to the Australian market, as the company isn’t perhaps as invested in its culture as with Canada, what are your expectations for it? It’s a highly competitive market.

It’s probably one of the most competitive regulated markets out there, but to our knowledge, it doesn’t have many, let’s say, esports-focused operators. The reason why we’ve been so successful is we’re very good at getting localized pretty quickly. We have a country lead that is basically like the CEO of Rivalry for that market; almost like a Rivalry franchise in Australia. And that person is from there, lives there, and is part of the community like we are in Canada. We also have a team built out there: they understand the flavor of how we do things and are part of the demographic. 

But the thing that is unique about Australia is that it will be our first regulated market, so we can do more on-the-ground advertising legally. We’ll have a mobile app eventually, and we can do Facebook ads, and Google ads. We currently can’t do any of that in any of our markets, so we will actually have way more range of marketing there. It’s exciting for us.

The American market is one that you mentioned Rivalry has no immediate plans for a launch, but represents a long-term possibility. Perhaps it’s a bit obvious of a question, but what would the strategy in that particular case be, given now most operators are looking at the American market as the biggest opportunity for sports betting?

We’re having a ton of active conversations. It’s just that the way that the US has developed on a state-by-state basis limits the number of licenses or skins you get from a land-based operator. It’s just not as fertile of a ground. We can’t go market state to state and apply through a regulator like you can in Ontario. It’s just different.

There's another way that we look at the US, and the conversations we’ve been having with very large existing operators support this. They see our brand and our equity with a younger demographic, and the ability to acquire them, as something that could be very complementary to what they do. So it would be more like a brand relationship, or like a co-branding opportunity, where the esports component of their business would be brought to you by Rivalry, and we would sort of own it and operate it.

It’s just not immediate in that it’s not going to happen in the next six months, but our goal is for the next 12 to 18 months to be able to demonstrate to the market that we have a strategy and opportunity to enter.

Rivalry has claimed it is building the most comprehensive betting and entertainment experience for the next generation. What does this exactly entail, and what changes do you see in terms of what this newer generation of bettors want?

We always talk about entertainment. Rushlane, our casino game, for instance, is the first of its kind. It’s a racing Mario Kart-type game, set in a cyberpunk world. And it is not like a slot machine. You don’t sit there and hit it again and again. It is built to keep people engaged. They have avatars, there’s dance emotes, there’s live chat. Streamers and content creators play the game we created. You’ve got game lore: there’s an underground bar they hang out in, and there’s a whole world around it. 

The wrapper of entertainment goes on everything we do, from our social media to our content, and the way we build the products. The system we have, called Quest, is an entertainment-based kind of role-playing game that sits on top of Rivalry. So we’re always injecting that in, because the next generation of sports bettors, which is really just under 30s, don’t bet like their parents do. And they don’t invest like their parents do. The way that they buy stocks and speculate on crypto and other things is very different. Their use of these consumer products is different, where you find that you have to inject a lot more clout and entertainment into the experience. 

That’s why people bought Gamestop stock. It was a “meme stock.” Of course they wanted to try to make money on it, but it was also like a ticket into the meme. And then you go on TikTok, you show your portfolio, and you’re on Reddit... And it’s just fun. It was like an entertainment experience owning those stocks. I think that’s how a lot of things are done now. It is a whole new experience. You can wrap around it the whole influencer component as well. 

Betting is the same: we find that people on Rivalry are betting in higher frequency smaller amounts. They’re taking pictures of their betting slip, putting it on Twitter, sharing it with their influencers, the community they have with that influencer, the Twitch community... There’s that whole component to it now, and we play into that because it creates so much more engagement in the experience. That’s what we talk about when we say “a comprehensive betting and entertainment experience.” 

I saw a great tweet a few years ago that really resonated with me: it basically said every consumer company for under 30s is also a media company. And we definitely take that to heart. It’s the style of marketing and the type of engagement that this demographic is looking for in its products now. If you’re not bringing more to the table as a consumer experience, then you’re just not gonna find success.

Do you see a correlation, and a willingness to engage with the sports betting market, from your esports audience?

I’d say that people committed to esports are definitely still sports fans. For example, South America, as a geography, is one that we are active in. They’re huge League fans for sure; huge Dota fans depending on the market; and huge CS fans, also depending on the market. But when soccer is on, they also want to bet on it. It’s like there’s still a generational thing, where the grandfather was a fan of the soccer club, and then his son was, and then he’s the father of the gen Z kid. And that kid is still also a fan of that soccer club. There is a historical component to all of that that still takes place.

I’d say the only difference is that esports is in some geographies more predominantly watched by an under-25 audience. We use a kind of branding approach in a way that we get them excited, and then we make sure we offer sports betting as well because they still want to bet on the UFC sometimes, or boxing, or soccer, or whatever.

Regarding Rushlane, you mentioned the game combines social interactions of massive multiplayer online games, such as emotes and avatars, with the mechanics of a casino game. Rivalry is claiming it is a new genre of gaming. What does this exactly mean, and what potential do you see in that market?

A typical online casino experience, like a slot, is a very isolated experience. You are playing in isolation and you’re just hitting a slot machine. With Rushlane, we didn’t introduce that kind of thing. Our audience is very social, and very community-based. We wanted to produce a game that was consistent and empathetic to that. 

You cannot play Rushlane alone. It requires a certain number of players. You have to wait for other players to join in the lobby before the game actually starts. There’s a live chat component and every user has a username. So rather than betting on a virtual horse, you are the horse. When you enter the game, you see yourself populate into the game. There’s this more active feeling of participation. And then we can add way more layers of customization and engagement into it. 

Rather than like a slot, which has one singular experience, Rushlane is a game with lore. It’s a world we can constantly be expanding; there are characters we’ve created. It was built to be streamed, so we created a thing called “After Hours,” these events we run on the weekends. And using the Unity game engine, we rendered an underground bar. It’s kind of like Blade Runner, very cyber-punky. The content creator sits in the bar, and it’s super dynamic around them. The people in the bar are like characters from the Rushlane game lore. It’s like a communal experience.

We’ll be able to keep adding into that more customization of avatars, make the waiting and loading area a little more mobile… Maybe you can move around in it, and just hang out. Maybe we’ll have music; it will be playing and people can just chill on the site as their avatar. It opens up the door to a gaming universe of this style and flavor of games in a regulated environment where people can put up a little bit of money and have some fun. And it takes away this isolating experience.

If you follow Twitch drama, you’ll see slots are getting a lot of flack. There is also a stigma against slots in our view among younger consumers, so we want to move away from those experiences and introduce something super novel to the market, which is what we’ve started to do with Rushlane.

Taking into account your experience within esports and the new sports betting market, what do you see as the future trends gaining momentum? We’re now talking a lot more about crypto, VR...

In esports, we think of mobile esports. Mobile games and competitive mobile gaming, like mobile esports in South America and Southeast Asia, and basically more developing markets other than core EU and North America, are in many cases bigger than PC and console esports by a very significant margin. There’s no great betting product for it right now for a lot of reasons, but we expect this to be coming very soon, like early next year. And then I think that will massively open up the success of those titles, because more betting means more viewership, more awareness of it. I think that you’re gonna find in the next couple of years one or two mobile esports titles will crack the top five most bet on esports for sure. That is an expectation we have. We’re extremely bullish on mobile esports

From a sports betting macro perspective, crypto is a little odd. I think that it will continue to be a deposit method in growing numbers. But then there are all these offshore crypto-only sportsbooks, and I personally hope that there will be more of a regulatory crackdown on it. There have always been offshore sportsbooks that try to skirt the law, but they historically used credit cards or transferred money. If you were younger, it was just harder to do that. Now there are offshore crypto sportsbooks with very suspect licenses, or none at all. And it’s just a QR code, and your crypto is in, and you can VPN and put in any information in the KYC form... We know there are people under the age of 18 doing that. This sector still needs consumer protection.

From a sports betting thematic perspective, I think that people want to bet on more stuff. The thing that some of the crypto sportsbooks do well though is that they offer markets on any kind of event. And I think that is becoming more popular. People want to bet on really weird things now and speculate on crazy stuff, like what is Facebook’s corporate rebrand gonna be like. People want to put skin in the game on really random things. I think there’s going to be more market types. Historically, betting on politics was the kind of odd market on sportsbooks. But I feel like that offering is going to expand a lot to weird events people are going to be interested in speculating on.