Golfers Will Bet Against Peers, Startup Wagering They’ll Compete Against Themselves Too

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Golfers Will Bet Against Peers, Startup Wagering They’ll Compete Against Themselves Too

Americans have long shown a willingness to wager against their peers in a social setting. Just look at all the money gambled on golf courses and in bowling alleys.

Skill Money Games, a startup that only recently emerged from stealth, is betting they’ll do so against themselves too. 

The company recently rolled out the first AI-powered individual skill-based real money gaming product. 

“For the first time, anybody can step into a golf simulator enabled by our technology [and play for cash with every swing],” Sameer Gupta (co-founder, Skill Money Games) said. 

The tech alters the difficulty of the contest, or the payout amounts, based on the competitor’s skill set.

“We’re revolutionizing the way adults play [these] games,” Bryan O’Reilly (CEO, Skill Money Games) said. “We’re giving them [a chance to participate in] real cash contests where they can get immediate payment.”

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O’Reilly spent a decade as the local partner for Topgolf’s flagship Las Vegas location. There he saw the vast amount of money that would change hands on made-up peer-to-peer skill-based contests and wanted to find a way to profit on the action.  

There was “this overwhelming need to add some technology [and capture] all the [gambling] that [was] occurring at Topgolf [locations], on golf courses, [in] indoor golf lounges, and bowling alleys,” O’Reilly said. 

Tech limitations (which have since been addressed), licensing costs, and regulatory concerns kept Topgolf out of the skill-based contest business. But O’Reilly, who left the company prior to its ’21 merger with Callaway Golf, understood sports betting law, and knew a skill-based product could go nearly nationwide without having to navigate the regulatory process.

There are skill-based exceptions in ~45 states. 

Skill-based gaming exists as a counterpoint to chance-based or traditional gambling.

“Where the majority, the preponderance, or all of the activity is based on the skill of the actual contestant involved,” Gupta said (think: hitting a golf ball or bowling a ten-pin ball). 

Daily fantasy sports can exist because of skill-based exemptions. However, it tends to be played in a contest or tournament format.

Gupta, along with his co-founders Ofir Ventura and Seth Schorr, applied for and were awarded a patent on an man versus machine concept. 

“Our presumption is that there are advantages to having a house in so much that your most engaged players can play over and over again,” Gupta said.  

They way it works is Skill Money Games installs cameras on operating golf simulators (the company has a non-exclusive partnership with Full Swing). Its facial recognition capabilities identify the individual stepping into the simulator (after he/she registers, of course) and its AI-powered gaming engine creates challenges tailored to the individual’s skill level.

“It figures out how good players are by taking the advanced analytics around every golf swing and using a machine learning algorithm to [create what we call fair and fun circles],” Gupta said. “We trained this thing by having close to 1,000 people come in and take hundreds of thousands of shots.”

The worse the player is the larger the target circles and/or win payout on each of his/her shots will be. 

Don’t try to fool the technology. Each player’s skill is revised after each swing, to ensure the challenges remain fair and fun.

While every player has a reasonable chance to win any single contest, Skill Money Games believes its engine is accurate enough to ensure the house wins over time.

Skill Money Games went to market with a golf product. A skill-based bowling game is also in development. 

“Just [those markets] alone are massive,” Scott Barber (CEO, EBCI Holdings) said. 

ECBI led Skill Money Games’ $5 million seed round. The company has raised $6.5 million to date.

For context, there are conservatively ~5,000 bowling and indoor golf venues across states that allow for skill-based gaming. The point-of-sale number is closer to 100,000. Skill Money Games hopes to be able to scale into 10-20% of those lanes and golf suites over the next few years.

“Then the question becomes what’s the gross gaming revenue that can be generated from those [individual] points of sale,” Gupta said. 

No one really knows at this point. Skill Money Games is the first company with a real money man versus machine skill-based product.

But “people hit about one and a half shots a minute [on a golf simulator],” Gupta said. 

To be clear, Skill Money Games is not in the golf suite or lane rental business. Contestants rent space as they normally would, and then use an integrated digital wallet (no different than within a sportsbook application) to compete for real money each time they swing a club or bowl a ball.

So, if someone is completing 100 golf challenges (or shots) in an hour, and the average challenge fee is $5, the simulator is generating $500 in handle an hour. And if the average occupancy for said suite was six hours per day, that would mean $3,000 would be up for grabs daily. A 10% hold would see the simulator claim $300/day in profits. 

“That’s a pretty good venue,” Gupta said. It “also sort of looks like a slot machine [or a peer-to-peer tournament] when it comes to unit economics.”

Skill Money Games isn’t banking on that outcome. Its internal projections are far more conservative.

“If we could show $100 win/day per unit in distribution that would be a huge for us,” Gupta said.

That would mean the company would be raking in $100,000 each day with just a 1% market share. 

Many casino resorts have bowling alleys and/or golf simulators on premises. It only makes sense for those properties to fully activate the space with a skill-based gaming component.

“The typical [bettor] is only going to spend two to four hours gambling,” Barber said. “Experiential and interactive entertainment offerings extend the length of stay and share of wallet from the customer.”

Simulation-based sports entertainment is a rapidly growing vertical (see: baseball, basketball, darts, soccer), and Skill Money Games’ underlying tech stack is appliable to any digital sports or video gaming platform. So, don’t expect the company to stop at golf and bowling.

While Skill Money Games is currently focused on developing personalized challenges around individual skills, it holds four other patents, including for a one peer-to-peer product (think: four people hitting golf balls, everyone wagers $10, whomever accumulates the most points from 10 strokes wins the entire pot) and another that allows participants to win with friends (think: four people bowling, everyone wagers $1, if anyone bowls a strike in the frame each person in the group wins $10). 

“As soon as you become a wallet, you facilitate a lot of what is already happening and are able to monetize it through a bunch of partnerships or internal,” Gupta said.

Skill Money Games is in the process of applying to roll out its offering in New York, and is looking to expand into several other states where Full Swing has high penetration.

“Expect [to see] us in some high-end country clubs, potentially some mobile activations, and some high-profile cold-weather venues in major metropolitan areas [before year’s end],” Gupta said.

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