I am Aarihant Aaryan! Welcome to the Iron sharpen Iron newsletter,
I share my weekly homework from my startup journey, learning about human behavior, and sometimes decoding industries and business models for fun.
I can’t control my curiosity :) )
Real Money Gaming is one of the biggest markets in the world, it is one of the oldest businesses in making, real money gaming existed in offline world before, few people prefer it to call gambling - I call it skill based gaming
Quickly helping you to understand what is real money gaming - users play games for real money with the hope of winning more than they initially invested
Real Money Skill Games market size was valued at USD 14.92 Billion in 2022 and is expected to expand at a CAGR of 14.12% during the forecast period, reaching USD 32.95 Billion by 2028.
Lottery is one of the Inital form of real money gaming, tho people assume there is no game consumer is playing but it’s pure luck based, I consider them burning energy to win the lottery like some participation in a game or lottery.
I know participants who used to travel to different places and buy lottery tickets in hope to get the right ticket
According to the North American Association of State and Provincial Lotteries (NASPL), the total sales of lottery tickets in the United States in 2020 were approximately $91 billion. This figure includes all types of lottery games, including scratch-off tickets, daily drawings, and multi-state games like Powerball and Mega Millions.
In july Americans have wagered hundreds of millions of dollars on lottery tickets just in the past two days, I had a lottery participant tell me, the probability of winning the lottery is close to 0 but that’s not the point, with your $2 ticket I’m purchasing the dream of being able to win the lottery.
The biggest lottery company in the world in terms of revenue and market share is the China Welfare Lottery. The China Welfare Lottery is a government-run organization and is one of the two major lotteries in China, the other being the China Sports Lottery.
The China Welfare Lottery was established in 1987 and has grown to become the largest lottery in the world, with sales of approximately $57 billion in 2020.
Well, Now we are in a digital all the real money gaming activities are becoming digital, there are tons of games on playstore that have poker, rummy,lottery,ludo,bingo,money based quiz, fantasy gaming, multiplayer competition gaming.
Overview of how much RMG businesses make in India
I have said this often in India If you can help people make money by some or the other medium and you take a cut out of it, you’ll make good money vs doing any software business.
Helping merchants sell more is one of the ways you make more money in India, Amazon, Meesho, zomato, oyo, and many other companies are in this business.
Real money gaming, even fantasy gaming comes under the radar is one more interesting line of business, that has huge margins and high consumer motivation and it is a product that sells hope
Dream11:
In FY 21 Dream 11 revenue was 2,544 crore and its profits rose to 327 crores.
Dream 11 has 12 crore users on its platform and close to 5M daily active users on its platform. 12 crore users are close to 20% of the active internet population in India.
Dream 11 is not a fantasy gaming platform, it is a hope tech platform.
In India, if you make more than 25,000 per month, you are earning more than 90% of India.
That's why you see many instead of building themselves, they build teams on dream11.
It gives people the hope of making a minimum of 2x of what they invest. The probability of getting 2x of what they invested is 50% on its platform.
MPL:
MPL has a revenue of $100M+ and $1.1 Billion to $1.4 Billion in GMV - 70% to 80% of the contribution to their revenue and GMV comes from enabling games like Poker and rummy on their platform - that’s real money gaming
They have a set of users from Tier-1 cities that spend lakhs every week.
Crickpe:
A couple of months back Ashneer Grover launched his own fantasy platform, called crickpe and it will fail, I personally don’t root for anyone’s failure but it is what it is - If they make it happen, I would be extremely happy for them
Why crickpe won’t work:
When you talk to users of any fantasy platform, they are coming to bet because of the value of the prize pool (the Prize pool is basically money pooled in by all contestants, the value of the prize pool increases as more and more people participate) they want to make life-changing money, they aren’t interested in thousands and lakhs of rupees.
So now it’s a network effect, the more people participate → the value of the prize pool keeps increasing - as the value of the prize pool keeps increasing more people participate
For Crickpe to win in this business, they’ll have to solve for network effects, they started off with a prize pool worth crores, and now their prize pool is worth just a few lakhs - no user wants to play in a small prize pool. They are not able to fill 10% of their spots
Many other companies like Nazarra Tech, Bet365, Winzo, SKILLZ and paytm games are trying to make certain level of impact in this space.
Overview of how much RMG businesses make in the USA
Playtika Holdings:
Playtika Holdings is like HDFC bank for real money gaming in the USA, they have more than 140 Apps across the app store and play store, has close to 34M monthly active users playing their games, In 2022 their revenue was $2.6 Billion dollars
Their core top product Bingo Blitz numbers are staggering
Average Daily Active Users of 8.8 million
Average Daily Paying Users of 313k
Bingo Blitz revenue was more than $450M in FY 22
Draftkings:
DraftKings is a popular daily fantasy sports platform that has expanded into the online sports betting market, The company offers a range of sports betting options, including pre-game and in-game betting, daily fantasy sports contests across multiple sports and contests with various buy-ins and prize pools.
DraftKings reported total revenue of $614.1 million, up 49% from the previous year.
Final Thoughts: RMG market will become more bigger overtime, but what it lacks is innovative games - if innovative and simple games are build, platforms will see more adoption.
If you have any thoughts share them in the comments :)
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Who is the owner of Dream 11 in India?