Benchmark Europe Invests In UK Gambling Site. Prostitition, Drug and Gun Startups, Send in Your Business Plans.

IF gambling is legal, then why not invest on it - Only Moslem countries (and not all) consider it illegal…

The US is something of an oddity when it comes to gambling, so your view is a bit clouded. There’s really nothing unusual about this in the rest of the world, and placing bets via a mobile phone is hardly an indicator of a gambling problem.

Robert, given how much of my life I’ve spent living in Europe, I think I have a good idea of how gambling is perceived there, and how open in particular it is in the UK. I disagree - anyone making bets via text messaging isn’t doing it for entertainment value. They have a problem.

#1 - I don’t have a problem with the investment. I’m just wondering if Balderton is going to have a PR issue down the road.

Mike,

I think your comment that “…anyone who’s placing bets on sporting events via their mobile phone probably has a gambling problem, which betNOW is exploiting. I don’t have a problem with the existence of such services in general.” is a huge stretch. I think having the mobile capability is one of convenience vs. addicition. The fact that a person can drive to a Casino or using their mobile makes no difference…Addiction is a behaviour that people should control not the various business enterprises that provide the service of gambling.

Facts are, gambling is a viable and legal business. So why not invest much less interact with those people (users) by providing various media to engage a website of this sort.

Surprisingly, I don’t believe you’re being objective in this post.

Wonder if this will effect poker supply sales. http://www.pokerchest.com

Kevin - yeah, I’m never trying to be objective. Just right.

Remember that my point is not that the investment is bad from an ethical point of view, just that Balderton may regret it someday if the business gets a bad reputation.

Prostitution is legal in many countries, too. Would Balderton get involved in that kind of business? Why not? Zivity is the first porn site to get silicon valley funding, why not go full on.

And drugs are also legal in some countries. How about a Balderton funded startup in Amsterdam that distributes marijuana?

Gun sales in the U.S.?

All I’m saying is, I’m no less surprised to see Balderton getting into gambling than I would be to see them selling prostitution, drugs, or guns. Seems like a PR blunder to me.

I like the cliched girl-in-lowcut-top in the home page instructions. It really suggests that they’re not after the lowest common denominator here…

Mike,

I’m guessing your not much of a gambler..

“anyone making bets via text messaging isn’t doing it for entertainment value. They have a problem.”

That is a pretty generalized comment. People have been betting with text messaging as long text messaging has been around. Since the phone was first invented, people used it to call their bookies. Texting in a bet vs calling in a bet, is the same parallel as calling your friend vs. texting them. This is just organized platform to do what is already being done. Gambling on your phone has also been around for years. I play poker on my street car ride sometimes instead of reading the paper. And yes, it is for enjoyment.

AdvertiseSpace - yeah, well, people have been injecting heroin into themselves for a long time, too. It doesn’t mean people who do it don’t have a problem.

You are right that I’m not much of a gambler, although many entrepreneurs are into it. I just get bored.

#6 - Serious stretch on trying to be relevant to this topic and pump your client’s website. Spare us your marketing efforts please.

RE: Investment. I think just because gambling is viewed differently in Europe does not mean that the implications of this are different for a gambler. Similar to alcohol some folks have a problem and some don’t but placing a drink at someone’s fingertips will certainly increase consumption and that may lead to a tipping point for some people.

If that is the case it will be good for business and bad for the person. I think Michael is correct in his assumption that this service will cause problems in some people’s lives that may or may not have surfaced otherwise. However, being in Europe perhaps the media will not have an interest in the story given the widespread acceptance of gambling. Either way an interesting investment which in America has moral implications.

can’t shake off your puritan roots can you Michael?

Michael lost his virginity at 26. You need to understand where he’s coming from.

Arrington has a point. Gambling via text message indicates a dependency. either for gambling, text messaging; or both. Personally, I think this whole thing with living your life on a cell phone, iphone, smart phone, or whatever, to be very disturbing in and of itself. It’s sad to see so many people foregoing a real life for stupid cell phones, and all the hoopla surrounding them.

As for Balderton, I think this could come back to bite them on their greedy asses.

I really enjoy your site and respect your opinion, even when sometimes I disagree, but this article is really written form a very “puritan” US american perspective. Gambling can be fun, and can be addictive, but so can many legal things, even youtube can help certan problems to surface etc.
I strongly disagree with your headline. I think their investment was wise.
Btw, different countries have given themselfs different legal frameworks, that is also because the people and their lawmakers want it that way. I would like invite you to come to Europe even more often and discuss the differences in these touchy subjects with friends interested in the “little differences” (Quote: Pulp Fiction)

..as you said, even Guns are legal in some countries

I am a long time reader who respects most of the stuff written here. But, I have to say, that the headline and some of the content is unfair. There are many listed betting companies which have delivered tremendous value to their investors without any bad PR and making an investment in that industry is not akin to prostitution by any stretch.

Michael,

“Generally speaking, anyone who’s placing bets on sporting events via their mobile phone probably has a gambling problem, which betNOW is exploiting.”

As someone who has launched mobile betting products for regulated, reputable, UK companies, I can say with authority this statement betrays an incredible amount of ignorance. There was never any indication that people who bet through their mobile phones are any more likely to be problem gamblers than those who bet through the web.

Be aware that this company is regulated by GamCare, an organisation aimed at minimising problem gambling. GamCare certification requires a significant undertaking on the part of the operator to minimise the likelihood of problem gambling and also to quickly intervene when such behaviour is spotted.

Joe Coughlin
Gala Coral

May I suggest we look how gambling in the US.. it legal via Wall Street, you can trade via cell phone…The odds in online gaming in the UK these days have a better return…You have bet against the house, now lose your house…subprime is my new ringtone!

Here’s a dream reality… gambling in Asia via cell phone….kaching, kaching, kaching! But wait, if you gamble, we will send you some dimsum!!!

What about companies that peddle tobacco, booze, or fattening foods that might clog your arteries and kill you ded from a heart attack?

What about WYNN, HET, MGM? Should individual investors steer clear of those based on the lives they inadvertently destroy?

– excellent topic though and nice to see some intelligent discourse here and not just a bunch of people whining cuz they didnt get nominated for a Crunchie

Michael, I think you said it right when you said:

“I’m sure Balderton did their due diligence and betNOW is a clean company with clean founders.”

They have made good investments til now, lets give them the benefit of the doubt that the founders are clean and are doing their best to offer an in demand service in as non-impactful a way as possible. They limit daily and weekly bet losses to a low level to stop any potential addicts going overboard, which is more than can be said for casinos, slot machines, bookies, or any of the other myriad ways people can bet.

oh get over yourself. Americans have a ridiculously censorious attitude to gambling.

I think you really portray some startups negatively right from the start of things. gambling is gambling regardless how you place your bets, come on Mike you should know technology makes things easier, regardless what its all about. I wonder about some of your posts, do you ever get a bag of cash left at your door. haha

@Gus:

We also have good teeth! Brits gamble first and then pull their own teeth with shoelaces!!!! lmao

Benchmark Europe made a ton of money through Flutter/Betfair a few years ago, why should they pass on the opportunity to make more?

a mobile betting service was COMPLETELY PREDICTABLE. and giving anyone almost instantaneous access to anything can be addiction forming. why do you think there are lottery terminals in every gas station and corner store? not as instant as a mobile phone, but various state lotteries will reach the mobile soon enough. and then it will be a gov’t sanctioned event.

if the point of this post is to question a VC’s investment from a PR perspective, which your last sentence certainly makes it sound, then the concern over individual access and potential life-shattering consequences is hogwash.

Perhaps somebody should open an options market and sell options on whether losers will pay their phone bill or not.

…”How about a Balderton funded startup in Amsterdam that distributes marijuana?”

Answer: I’d like to become a limited partner in the fund. After all, there is lots of money to be made. But, I’s also follow up my investment with a rehab center so I could build a long term revenue model

All kidding aside your story has lots of valid points. I think your point should be taken as don’t sacrifice the long term for the short term gain….

Surprised you guys have not written about the Snapnames/Moniker news this AM.

This is a legitimate business with a legitimate service.

Mike,

You couldn’t have this one more wrong… and your post sounds very biased and slanted. Who are you to shake your finger at someone making a perfectly legal investment in the gambling market in the UK? Why no moral judgment on the AdultFriendFinder deal? Guess you like your porn and promiscuous sex with strangers… it’s cool, I do to. Also, considering you make your money by commenting on who VC’s are ‘betting’ on… this article wreaks of hypocrisy. I’d say anyone who invested heavily in Tech before the bubble burst had a serious gambling problem… wouldn’t you?

All jokes aside, this could be a useful service that easily make a lot of money legally in the UK. For example, live betting ( ie. during an event ) is a massive growth area in the online gambling market. If you’re in a pub watching a match (or at the event) and you want to place a bet (as many people do) sending a txt is a convenient way to do so. Many of the largest UK bookmakers have mobile sites that allow punters to place bets via their mobile…. though not via txt message.

Do all of the people using their mobiles to place bets have gambling problems?? No.

Interesting investment but strange slant to take on it. Firstly, telephone betting has been going on in the UK pretty much since the introduction of the telephone. I don’t see betting by text message as a massive innovation although certainly handy.

Secondly, while betting by phone has been legal since at least the 1960’s the UK betting laws have been increasingly liberalised over the past 7 years (although our new Calvinist prime minister isn’t allowing us even one big casino ). The interesting thing is that over the past 7 years government research has shown that the instances of problem gambling is stable.

Lastly, this isn’t Balderton’s first investment in a UK betting company. They already have a stake in Betfair (which has offered mobile betting since about 2002).

(Disclosure: As a former employee I have a small amount of shares in Betfair)

Alcohol, cars, planes, guns, the list goes on and on produce plenty of sob stories you liberalcrite. Let adults make their own decisions and stop trying to run people’s lives.

Gambling is a sin! Sinners go to hell.

historical ties to organized crime ??? - you have lived in UK, i find this statement unbelievable, these are professionally managed companies which make a lot of money i think its one of the few business models that are actually making a lot of money on the internet , its just the whole of las vegas online!

With regards to texting to place bet i don’t think you can automatically qualify them with a gambling problem, texting is a way of life here in the UK, would you say the same if someone uses an IPHONE to place a bet ?

I totally get Michael’s argument. It’s like, reductio ad grandfatherum. Technology is always the great indicator of moral problems. That’s not objective, it’s just right. Damn kids text messaging their bets, ruining their family’s lives, ruining their investors’ PR relations, not paying attention in class. Our moral fabric is eroding under all this efficiency and convenience. It’s a mess. Trust me, I know. I gambled once. I also gambled in Europe and like, everyone agreed there were certain lines you just don’t cross. At least show up the the pub before placing your bet. And this doesn’t just apply to gambling: like Michael said, it applies to basically anything, like guns or drugs. Whores too, probably. When my pot dealer began accepting SMS orders, I knew I definitely had a problem. I don’t have a problem with pot — I mean how hot is Mary-Louise Parker? — we just need to keep these transactions within some reasonable limits. Text message bud = BIG RED FLAG. Let’s stick to walks down Haight Street. Or smoke signals, though that might fit with the laws of supply and demand in that particular example.

Mike,

In response, there’s a market for everything. Some things (eg. child porn, snuff, etc.) would be the exception of something not to invest in for obvious reasons - so I hardly think it’s a PR blunder on Balderton’s part to get into this legal business that just makes sense.

On another note, you continue to make all these leaps into things that may make people feel slightly uncomfortable, but they’re legal nonetheless. I guess we’ll use this post as a testament to your moral / non-objective slants.

BTW - You’re not right. You just think you are (lol), but at least you’re honest with your thoughts.

Jason:

“When my pot dealer began accepting SMS orders, I knew I definitely had a problem. I don’t have a problem with pot — I mean how hot is Mary-Louise Parker? — we just need to keep these transactions within some reasonable limits.”

f’ing hilarious. well done.

Kevin - I don’t equate laws to ethics. I am fine with gambling. I’m fine with gambling by text message. I’m just surprised Benchmark is bankrolling it.

Father Arrington, here are just come of the Venture and Private Equity firms that have invested in gambling:

Index Ventures (Betfair)
Softbank (Betfair)
Benchmark (Betfair)
Kleiner Perkins (Silicon Gaming)
Bain (GameLogic)
General Catalyst (GameLogic)
Maveron (GameLogic)
Apollo (Harrah’s)
TPG (Harrah’s)
Goldman Sachs (Station’s Casinos)
Morgan Stanley (Revel Entertainment)
Tiger (GTech)
MacAndrews & Forbes (Scientific Games)
Sumner Redstone (Williams Gaming)

not to mention the literally hundreds (thousands?) of institutional investors who invest in gambling public equities

So lighten up, will you? In excess, Coca Cola demonstrably kills. Does Warren Buffett have a PR problem?

WOW! All i can really say is wow. Ignorance is bliss ….

Michael … there is a world outside of the US … you should maybe check it out some time …

Mike is right specially if you have read the book ‘eBoys’ which is a story of benchmark’s rise in early days..that book is so awesome that hollywood can make a movie based on that..i just can’t believe benchmark did it…

*26 is right…this is a self-healing proposition: get addicted, gamble too much, can’t pay phone bill, get cut off, can’t gamble anymore..cured!!

Wow Michael, didn’t know you were so conservative regarding gambling.

The US right now is threatening the whole future of the WTO by not abiding by their recent ruling in favor of Antigua. Why should China etc.. take WTO rulings on copyright etc seriously when the US just picks and chooses the rulings it obeys?

No wonder the US is having a hard time lately with its image! Its not just Iraq and human rights…

I would think that text messaging would make it easier for casual gamblers to get in on the game. When I envision someone with a gambling addiction, I would imagine that person to be going out of their way to get a fix, like driving 3 hours late at night to get to Vegas or something.

The gangster history is only affiliated with Vegas casinos that occurred decades ago. I’m pretty sure that there weren’t any gambling websites then.

Gambling in the UK is very rarely linked to criminality, indeed many leading businesses on the London Stock Exchange derive their sole income from gambling, and many of our leading soccer teams are sponsored by gambling firms.

Of course there are problem gamblers, just as there are problem drinkers, but you can’t ban something that is enjoyed by so many people because of the small minority who can’t control themselves.

I hope you’ll take on board some of the comments from other posters, rather than getting defensive.

Thanks for all your entertaining and informative work, and best wishes for the New Year.

Wrap this around your head’s….Jurado Tequila is pure Nerd Herd!!!!

Some journeys are more rewarding than others.

I suppose net you’ll go after Donald Trump & Steve Wynn’s backers? I’m sure Goldman Sachs worries about the potential PR backlash. http://www.iht.com/articles/20...../icahn.php

Michael,

“anyone who’s placing bets on sporting events via their mobile phone probably has a gambling problem, which betNOW is exploiting.”

Do you believe that anyone who bets on sports has a gambling problem? If not, I don’t understand why the mobile aspect makes it any different. If someone has access to breaking, current information and uses their mobile device to make a trade in their investment portfolio, does that person have a problem?

I can understand your surprise at a name-brand VC backing this idea given issues of perception from LPs and others involved with them. But your statement above doesn’t appear very well-informed about the topic.

Isn’t all venture capital investment a form of gambling? Perhaps it’s time we started doing angel funding via sms. Might be symptomatic of deep-seated problems if you it happens, though

Oh, and it just strikes me as a little odd that Mike should have such a firm point of view in this post, but let’s the Zivity posts go by with nary a whimper…

@Chris: Spot on! All VC is gaming money! Infact Michael, how’s we start a Tech Crunch Stock Exchange? Trade only futures and options? hmmm

Gambling is wrong … death to all who gamble, I declare war on Paddy Power, allah whaqbar.