The line separating gamblers from investors became a little more blurred this year as celebrity sports fan Dave Portnoy led an army of new retail investors into stocks.
Now football matches have resumed, the data they generate — from player form to goals lost and saved — will spur fresh trades. Genius Sports hopes to capitalise on this intellectual property.
The sports data and technology group is due to complete a $1.5bn merger with New York listed cash shell dMY Technology Group to go public early in the new year.
Sports professionals have long recognised the value data analysis brings to performance on the field. Betting groups like Flutter also pay richly for data that helps predict the outcome of events and keeps punters engaged. Sports teams now want to license “official data” to help offset lost ticket sales. The attraction for investors lies in exposure to a fast growing subset of the $30bn global sports betting market.
Genius Sports hopes to capitalise on the long tail of lesser known sporting events. Rights to data from events like Premier League football or NBA basketball are expensive. Lower profile sporting events still generate healthy interest from gamblers. US fantasy sports and betting group DraftKings exemplifies the demand. Its shares have risen fivefold since listing via a cash shell a year ago.
Revenues at Genius Sports are expected to hit $190m next year, implying a sales multiple of 7.5 times. That looks inexpensive compared to DraftKings, which trades closer to 25 times, and online casino technology group Evolution Gaming’s 20 times. Lower competition in sports data provision may be an edge. Genius Sports operates an effective duopoly with rival Sportradar. First-mover advantage will be key to winning data deals with sports teams, which can offer juicy ebitda margins of 40 per cent. That is the kind of result that will keep fans engaged once Genius Sports shares go live.
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