10-07-2025
Venture capital firms bet big on gambling. Now they're banking on addictions.
Alumni Ventures got in early on the sports betting trend. In 2017, the New Hampshire–based venture-capital firm was part of an initial round of investment that raised $2 million for Sleeper, a fantasy sports and betting app. Four years later, Sleeper was valued at $400 million. This past August, Alumni made a new bet—this time on gambling addiction treatment, investing $1.5 million in Kindbridge Behavioral Health.
Alumni isn't the only one getting in on the pair trade. Bettor Capital, a VC firm devoted entirely to gambling, invested in Kindbridge in March. In all, Barron's identified six VC firms simultaneously invested in gambling and gambling treatment. Most didn't respond to requests for comment.
The investment thesis is straightforward: As more people gamble, more will eventually develop a gambling problem and seek help. Venture-capital firms see the market for treatment growing in lockstep with the market for gambling.
Tracy Barba, director of the Lucas Institute for Venture Ethics at Santa Clara University, says the paired investments are a clear 'conflict of interest" without historical precedent.
'Nobody's telling them they can't do this," Barba says. 'When there's no regulation, no rules, and there's no consequences or accountability, the only thing that is going to be driving their decision-making is internal revenue return."
Boston-based Will Ventures has a stake in both Birches Health, a telehealth gambling treatment firm with an 'empathetic online care model," and a stake in BetHog, a crypto casino and sportsbook that calls itself 'nakedly degen," short for degenerate.
All told, U.S. VC firms have invested $2 billion in gambling businesses since a U.S. Supreme Court ruling opened the door to nationwide sports betting in 2018, according to PitchBook. As a business, treating problem gambling is still in its early stages, with VCs generally participating in so-called seed round funding for treatment firms.
As the gambling industry has realigned itself toward a younger audience that prefers virtual betting, treatment is becoming more tech-forward, too: Casinos and in-person therapy are out; smartphone bets and app-based recovery are in.
Half of American men under 50 have an account on a digital sportsbook, according to a Siena College survey. The Lancet, a medical journal, estimates that 8.9% of adult sports bettors could have a gambling disorder.
With the pool of gamblers growing, investors are doubling down on both betting and addiction treatment. General Catalyst, a Silicon Valley venture-capital firm with $36 billion in assets, participated in Sleeper's Series A, B, and C funding rounds, a spokesperson for General Catalyst confirmed.
More recently, the firm invested in a seed round for Birches. Reva Nohria, a partner at General Catalyst who sits on Birches' board, said in an emailed statement that 'as gambling becomes more accessible—both legally and digitally—we expect demand for treatment to rise in parallel."
The Sleeper app has been downloaded 9.5 million times globally, according to market intelligence firm Sensor Tower. More than a quarter of those downloads came last year, for a 25% year-over-year increase.
Birches has also grown quickly since it was founded in 2023. By the end of the year, the firm expects to have more than 300 counselors specializing in gambling disorders, the largest such network in the U.S., the company says.
As Barron's has previously reported, there is no federal funding for problem gambling services, while state grants are often mired in red tape. States spent less than 1% of their gambling tax revenue on problem gambling in 2023, according to the National Association of Administrators for Disordered Gambling Services.
Business is stepping in to fill the gap. 'Private-sector solutions to most problems tend to be more efficient," says Nate Kline of Cistern Capital, a Birches investor that has limited its gambling investment to the treatment side of the equation.
Birches and Kindbridge have two advantages that most companies would envy: a growing customer base inside a historically underserved market.
'The rise in access to online gambling was not initially met with corresponding innovation in clinical treatment," Birches CEO Elliott Rapaport told Barron's in an email.
Cassie Puckett, a problem gambling counselor in Kentucky, says that in December she would typically see two patients a week through Birches. Now she sees eight to 10 a week. Birches says its providers completed 5,000 appointments last year and are on track to complete more than nine times that number in 2025.
'Telehealth is a much more scalable mental health solution," says Kindbridge CEO Daniel Umfleet.
While venture capital's dual-sided approach to gambling may concern ethicists, those on the ground advocating for problem gambling say they can use all the help they can get.
'On balance, it's probably a good thing," says Keith Whyte, who spent 26 years as executive director of the National Council on Problem Gambling.
'I hope that there is a lot more investment in responsible gambling. I'm not as concerned about the reasons why," Whyte says. 'The market's ripe. There's an opportunity to do well by doing good."
VC partners have embraced that view. 'The reason I love venture capital as a field is because you can bring a lot of really positive things to market through good economics," says Keaton Nankivil, the senior principal at Alumni Ventures who coordinated its investment into Kindbridge Behavioral Health.
'If Sleeper is gonna be in the world," he says, 'I also want to put out the balancing force."
To Nankivil, that balancing force is also the better investment right now. 'Whether I'm betting on FanDuel or Fanatics or DraftKings won't matter," he says. 'What I do believe is you're going to have a generation of people that are getting inundated with gambling and now need a solution for that."
While Alumni's investment in Sleeper predated Nankivil's tenure at the firm, he recognizes the success of the original gambling investment. 'The tension in venture capital is that we have that fiduciary responsibility," he says. 'And daily fantasy sports or gaming was a way to make money for our investors. It's still a really positive investment for us."
Those returns made investments in treatment possible, Nankivil says. 'Without Sleeper and the like, there is no Kindbridge."
A similar dynamic has played out in state legislatures, where problem gambling treatment doesn't get approved without gambling expansions and the associated tax revenue.
'Very rarely does problem gambling legislation on its own succeed," says Whyte, now president of consultancy firm Safer Gambling Strategies.
Whyte says there is opportunity in the mash-up of gambling and addiction treatment.
Sleeper has made an early connection with Birches. The two General Catalyst-backed firms have a partnership in which Birches is 'providing virtual resources and care for Sleeper's community."
Gambling and gambling treatment firms may benefit from data-sharing opportunities, Whyte says. Treatment firms could help fine-tune the algorithms used by gambling operators to identify at-risk bettors.
He flags one worry: There need to be 'strong safeguards in place to prevent, for example, a gambling company mining data from a gambling addiction firm to try and hook people who have gambling problems."
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