Waterhouse VC, the gaming and wagering-focused venture capital fund run by Australian bookmaking figure Tom Waterhouse, has published its July 2026 newsletter.
The fund invests globally in publicly listed and private companies across the wagering and gaming ecosystem and is available to wholesale investors only.
Since its inception in August 2019, Waterhouse VC has achieved a net total return of +2942%, equivalent to 65% per annum annualised, as at 30 June 2026, assuming reinvestment of all distributions.
This month’s newsletter focuses specifically on the impact prediction markets are having on the underlying economics of sports betting.
The World Cup provided a useful backdrop, with Kylian Mbappé becoming only the fourth player in history to score 10 goals at a single tournament, earning a second Golden Boot.
Lionel Messi scored eight goals while Spain ultimately lifted the trophy, and as Waterhouse notes, recreational wagering money tends to cluster around exactly these kinds of familiar names and favoured outcomes.
When those outcomes land in combination, liability compounds sharply, a dynamic that contributed to an estimated $438 million gross gaming revenue hit for Flutter, FanDuel’s parent, during a favourite-friendly run of NFL results in late 2024.
Parlays, or multis, have long been the mechanism through which this concentration amplifies, accounting for around 27% of money wagered but 56% of sportsbook revenue across Illinois, New Jersey and Colorado, according to the Wall Street Journal.
Operators favour parlays because bundling multiple legs into a single price makes the margin difficult for customers to observe, creating a product that pairs recreational demand with exceptional economics.
That dynamic appeared untouchable until 29 September 2025, when Kalshi launched Combos, sending DraftKings down 12% and Flutter down 10% the following day despite the product barely having traded.
Prediction markets have also extended their reach into California and Texas, two of the largest US states where online sports betting remains prohibited, bringing significant new demand regardless of how regulatory challenges ultimately resolve.
Bank of America estimates Kalshi processed roughly $125 million per World Cup match, and on a recent Sunday without a major fixture, the platform still recorded approximately $945 million in volume according to Ticker Tracker.
White Swan estimates that for the opening week of the 2026 NFL season, Kalshi alone will carry around $8 billion in maker risk, underlining how rapidly scale has grown.
The structural difference between a sportsbook and an exchange is central to the newsletter’s argument: on an exchange, a customer submits a request for quote and competing makers respond, with the best price winning the order.
The winning maker takes the other side of the position and posts its maximum possible loss as collateral until settlement, meaning capital efficiency becomes as important as pricing accuracy.
At a parlay price of 17/1, every dollar of customer stake locks seventeen dollars of collateral until the bet settles, making turnover speed a critical component of maker returns alongside pricing edge.
Correlation between outcomes within a match represents the core modelling challenge, since a comfortable French victory makes Mbappé scoring and over 2.5 goals landing simultaneously far more likely.
Waterhouse VC is working with one of the world’s leading professional betting syndicates to pursue this opportunity, combining decades of sports pricing experience with proprietary models and exchange-native trading infrastructure.
As the newsletter concludes, capital without pricing expertise gets picked off, while pricing expertise without sufficient capital simply cannot scale to meet the opportunity prediction markets now present.
