In the world of sports-betting, Genius Sports is set to make a splash on the NYSE through a deal with dMY Technology. This reflects the growing interest and investment in sports-betting among US investors.
The recent prospectus published by Genius Sports sheds light on the data rights market, particularly its partnership with Football DataCo (FDC), which owns the data rights for English and Scottish football leagues. This deal has resulted in a significant increase in data rights costs, rising from $9.1m in 2018 to $23.8m in 2019. The prospectus reveals that Genius Sports is now paying over $10m annually for these rights.
The escalating cost of data rights is ultimately borne by Genius Sports’ clients. The prospectus highlights a 36% growth in FDC betting data revenues after the first season of the deal, along with an increase in the number of clients using the official data. These factors contribute to the group’s rising revenues, which reached $114.6m in 2019 and are projected to grow further in 2020 and beyond.
However, it is important to note that the costs associated with data rights are also increasing, leading to pre-tax losses for Genius Sports. The prospectus acknowledges the company’s “history of losses” and the risks associated with sustaining profitability.
As the cost of data rights continues to rise, global sports-betting operators are left to contemplate the impact on their bottom line. The prospectus raises the possibility of increased competition among data providers, leading to even higher costs that may be challenging to pass on to customers.
These developments occur amidst a shifting landscape for the relationship between sports and betting companies. Regulatory changes, such as a potential ban on gambling-related advertising and marketing in the UK, could disrupt the current financial dynamics between bookmakers, teams, and leagues. The global betting industry has shown adaptability in managing costs, but the consequences of a data price war remain uncertain for both the betting sector and sports themselves.
Scott Longley, a journalist with extensive experience covering personal finance, sport, and gambling, runs his own editorial consultancy and contributes to various publications.
