When Sportradar suspended new commercial investments in Russia on March 30 as diplomatic efforts failed to end its invasion of Ukraine, rival Genius Sports assured investors that it had disabled all software used by Russian sportsbook clients with whom it had been doing business.
Despite the efforts, there are still ambiguities as to whether Genius Sports has violated the company’s self-imposed embargo on supplying sports betting data to the Russian market. The questions lingered Monday, days after reports surfaced that the Russian affiliate of Marathonbet used Genius Sports’ live feeds for at least three games contested on U.S. soil over a three-week period through April 5.
The latest allegations call into question the extent to which the world’s top sports betting data providers are still servicing Russia after insisting they had pulled out of the country. Genius and Sportradar operate a virtual duopoly on the global market by supplying data to about 85% of sportsbooks worldwide, according to various estimates. Two other large players, Stats Perform and IMG Arena, also have a considerable footprint throughout the marketplace.
Questions persist about whether the four continue to distribute live betting data to Russian sportsbooks.
Genius Sports latest betting industry player to end Russian activity
Genius #Sports has confirmed that it will no longer continue commercial operations in #Russia and #Belarus, as a result of the ongoing conflict in #Ukraine. https://t.co/UnHQ0CY796 pic.twitter.com/qslvOTBNk4
— The Momentum Letter (@MomentumLetter) March 7, 2022
Since the Ukraine conflict began in late February, a host of major sports betting-related companies reported winding down operations in Russia. Among them was Genius Sports, a multi-billion company that is the exclusive distributor of the NFL’s official betting data feed.
Genius, which maintains an office in Zaporizhzhia, Ukraine, noted in a March 18 regulatory filing that it planned to cease all commercial operations in Russia and Belarus until further notice. Six days later, Genius completed the process of disabling its software used by clients in the two nations, a company spokesman told Sports Handle.
Soccer publication Inside World Football reported on April 14, however, that Russian website Marathonbet.ru appeared to use in-game betting feeds from Genius Sports subsidiary BetGenius in an American Hockey League contest this month between the Henderson Silver Knights and the Rockford Ice Hogs. At the 9:50 mark of the first period, the Silver Knights led the Ice Hogs 1-0, accompanied with odds of -164 on Henderson to win. A code format from a page source on Marathonbet.ru’s live betting section contained the following coding, according to the publication.
The Knights are an AHL affiliate of the NHL’s Vegas Golden Knights. Since the screen shots were discovered, it is unclear if Marathonbet.ru has continued to use betting products from Genius to formulate in-game offerings on the NHL, or any North American minor hockey league, according to a source familiar with the situation. But the Russian site accepted in-game wagers on the April 14 matchup between the Golden Knights and the Calgary Flames, a 6-1 win by the Knights. While the in-game provider used by Marathonbet.ru for the game is unknown, it does not appear to be Genius.
Live screenshot captured by Sports Handle at 16:45 of the third period with the Knights leading 5-1
Placing rubles on U.S. minor league hockey
The AHL screen shots obtained by the publication marked the third instance since March 18 that the code “BetGenius” appeared on a page source of the Russian online betting site. On that date, Genius Sports filed a 2021 fiscal year annual report with the U.S. Securities and Exchange Commission.
Geopolitical tensions with the ongoing conflict between Russia and Ukraine may adversely affect our operations involving Ukraine, Russia and other countries involved in the conflict and present safety risks to our office and staff in Zaporizhzhia. Due to the conflict, we have ceased all commercial operations in Russia and Belarus until further notice. Further, certain countries or organizations have implemented actions and may implement further actions in relation to the conflict, including trade actions, tariffs, export controls, cyberattacks and sanctions, against other countries or localities, including potentially against certain government, government-related, or other entities or individuals, which along with any retaliatory measures, could increase costs, adversely affect our operations, or adversely affect our ability to meet contractual and financial obligations.
–Genius Sports, Form F-20 Filing, March 18, 2022
Five days later, a similar code pattern appeared on a page source when Marathonbet.ru offered live odds on the College Basketball Invitational championship game between Middle Tennessee State and UNC Wilmington. The code was spotted late in the second half when Middle Tennessee led the Seahawks 61-59.
A code format containing the phrase “BetGenius” also appeared on a page source on March 22 when the AHL’s Ontario Reign defeated the Grand Rapids Griffin 6-2. Screen shots containing the coding were identified in the second period when the Reign led 5-2.
Genius Sports has yet to comment publicly on the authenticity of the screen shots.
“We do not supply Russian entities and do not cover Russian events,” Genius Sports wrote in a statement provided to Sports Handle on April 14.
What constitutes a Russian sportsbook entity?
When Genius announced plans to cease operations in Russia and Belarus last month, the company discontinued data and streaming services for six leagues and federations in the former, along with another three in the latter, according to a company spokesman. The company also ceased to supply three Russian sportsbooks, most notably Liga Stavok, a company that ranked as the nation’s highest-producing bookmaker in 2018 with income of RUS 36.2 billion rubles, according to Moscow-based information agency Credinform.
Last November, the NHL named Liga Stavok as its official Russian sports betting partner, a designation the league has since paused due to the Ukraine conflict. Prior to last month’s quarterly earnings call, Sports Handle published a comprehensive feature that detailed Sportradar CEO Carsten Koerl’s holdings in OOO PMBK, a company that provides the management structure of Liga Stavok. While Koerl maintained a stake in the holding company as of March 30, he does not have any operational responsibilities or authority within the company, according to Sportradar.
As of Monday, Sportradar had not disclosed the number of Russian books it supplies with managed trading services. Representatives from Stats Perform and IMG Arena did not respond to a request for comment.
Though @Sportradar vowed not to sign new Russian sportsbook clients, the company didn't indicate if it will sever ties with current clients. @MattRybaltowski reviews after $SRAD earnings call on Wednesday. https://t.co/48ePSblOxj
— Sports Handle (@sports_handle) March 30, 2022
The distinction between Liga Stavok and a website such as Marathonbet.ru is stark. With headquarters in Moscow and hundreds of millions in rubles flowing into Russia, Liga Stavok is ostensibly viewed as a Russian entity. Back in North America, DraftKings is a U.S. pure-play sports betting operator, just as Toronto-based theScore is considered to be a Canadian entity. Although PointsBet offers online sports betting in numerous U.S. states, the Melbourne-headquartered company is listed on the Australian Stock Exchange. As a result, PointsBet is widely considered to be an Australian entity.
By comparison, Marathonbet is an international betting company that is apparently active in more than 100 countries, including Italy, Denmark, and Spain. Panserve Ltd., the operator of website www.marathonbet.co.uk, is located in Brighton, a southern English coastal city, according to its business listing on Bloomberg.com. Marathon’s U.K. website is the registered domain name of Marathon Alderney Ltd., which operates under six active licenses granted by the U.K. Gambling Commission. The company’s main sports betting website operates under a separate license issued by the government of Curaçao, a haven for online sportsbooks due to its comparatively low tax rate.
When Genius drew up a blacklist of Russian sportsbooks with whom to cut ties, Marathonbet.ru was not included, a source told Sports Handle. While Genius Sports has not publicly disclosed the names of the sportsbooks, there are indications that another company on the list is WinLine.ru, according to the source. In 2018, WinLine ranked sixth in income among Russian sportsbooks with RUS 10.9 billion rubles, Credinform found.
Marathonbet, which was established in Russia in 1997, is one of Man City’s official global partners. The betting firm, approved by the Kremlin for its gambling operations in Russia, has announced it will no longer accept bets in the UK because of “ongoing events in Europe” pic.twitter.com/ouv8kXfV77
— SteveWilson🏴#BLM #Rejoin #PR🐺 (@stevewil94) April 10, 2022
From a commercial perspective, when a data provider strikes a deal with a global sportsbook, the initial technology integration phase may only occur in one highly regulated jurisdiction, even though the data could be used in multiple locales. For instance, if a data provider consummates a deal with a sportsbook in the U.K., the operator can surreptitiously use the content in all of its jurisdictions, the source explained.
If a sportsbook decides to service dozens of unregulated markets, the activity could be difficult for a top data provider to conduct its proper due diligence. Conversely, with sophisticated monitoring tools at the fingertips of the multi-billion dollar corporations, it can be argued that such activity can be detected rather quickly.
Genius, according to an industry source, did not place Marathonbet on the blacklist and does not consider the company to be a Russian entity. Despite the recent allegations, Genius has yet to decide whether to sever its commercial relationship with Marathonbet.
As the Ukraine conflict shines light on sports betting activity in so-called gray markets, it is fair to question the responsibility a major global company assumes in monitoring the operations of its suppliers. Genius is not the first major sports betting company to apparently fall short in vetting its global suppliers, as the U.S. market continues to expand at a breakneck pace. One well-documented case surrounds DraftKings’ 2020 tri-merger with with B2B gaming supplier SBTech and Diamond Eagle Acquisition Corp., a special purpose acquisition company. Last June, Hindenburg Research, a forensic financial research firm, published a lengthy report alleging wide-ranging SBTech involvement in black market dealings overseas prior to the merger.
Among other allegations, Hindenburg claimed that SBTech hid some of its black market activities through a front company established in 2018. Despite SBTech’s public denials, Hindenburg alleged that the supplier engaged in black market activities in Iran for several years before disassociating itself from the business in early 2019. SBTech that June signed a multi-year deal with the Oregon State Lottery to power the state’s retail and mobile sports betting offerings.
In response, DraftKings excoriated Hindenburg, asserting that the firm had incentive to drive down its share price due to its short position in the company. Though DraftKings’ share price initially plunged 10% on the news, the company quickly erased all of the losses by the following session. Within a period of 24 hours, Wall Street largely dismissed the possibility of a state regulatory ban of DraftKings as a result of SBTech’s international activity.
*Credit Suisse Defends DraftKings Against Hindenburg
• Credit Suisse called the DraftKings share price drop "overdone".
• Credit Suisse says SBTech provides minimal value to DraftKings and the firm would use today's weakness as an opportunity with catalysts emerging. $DKNG
— Roundhill Investments (@roundhill) June 15, 2021
By the same token, Sportradar’s decision last month to remain in Russia did not trigger a sell-off. Instead, the stock jumped 15% to $17.45 on March 30 after the company eclipsed nearly every top-line estimate from Wall Street analysts. Since then, Sportradar has retreated to $13 a share, remaining near its 52-week low.
Still, Sportradar has a market capitalization of around $4 billion, far higher than Genius Sports’ market cap of approximately $780 million. On Monday, Genius traded around $4 a share.
Man City marathon
Over the last several years, Marathon has expanded its marketing and brand-recognition efforts by forging partnerships with the world’s top football clubs. Months after capturing its fifth English Premier League crown in 2019, Manchester City signed an eight-figure deal that named Marathonbet as the club’s first training kit partner. The lucrative deal followed a separate agreement with Spanish megaclub Real Madrid weeks earlier. As part of its extravagant spending spree over the six-month stretch, the sportsbook also notched a €10 million jersey sponsorship deal that June with another Spanish club, Sevilla FC.
Manchester City faces scrutiny over its official global betting partner Marathonbet: https://t.co/5CKMQwYKbh
— Sport Industry Group (@SportIndustry) April 11, 2022
Now, as the Ukraine war rages on, Manchester City has come under fire for its business relationship with the sportsbook. On April 4, Marathonbet temporarily suspended its U.K. website due to the ongoing conflict in Ukraine while restricting new customers from opening accounts in the country. By April 14, the site no longer allowed existing customers to deposit funds or place wagers. Marathonbet’s partnership with Manchester City is on the verge of being terminated, a club source told Sports Business Journal earlier this month.
As with most partnerships in sports, a major football club may be generous with its praise of a new sponsor shortly after completing a large deal. When Real Madrid signed Marathonbet three years ago, the club noted that the company established its roots in Moscow in the late 1990s with a plan to tailor its brand to betting shops across the city. Though the data provider claims that the book is not a Russian entity due to its U.K. exposure, there is a clear counter argument to suggest otherwise.
A blip on the radar
Over a three-year period through 2021, Sportradar has generated revenue of €7.9 million from OOO PMBK, the holding company of Liga Stavok, according to an SEC filing. The company’s relationship with Liga Stavok appears to make up a considerable slice of Sportradar’s business in Russia. Under a worst-case scenario, Sportradar projects a negative impact from the Ukraine conflict of €13 million on the company’s 2022 adjusted EBITDA outlook.
Although the scenario could materialize if international sanctions prevent Sportradar from conducting business with sportsbooks in the region, Morgan Stanley has not reflected any incremental impact if the company has to cease operations in Russia. While Sportradar’s Russian sportsbook partners have not been sanctioned, Morgan Stanley has been unable to gauge the likelihood of it yet happening, analyst Thomas Allen wrote in a research note.
Boehly reportedly paid around £120m last Sept to buy shares in the betting firm.
— World Sports Weekly (@wsportsweekly) March 31, 2022
Much like its archrival, Genius Sports derives a minuscule amount of revenue from its Russian operations. For the year ended Dec. 31, 2021, Genius generated about 1% of the company’s total revenues from its activity in Russia, Belarus, and Ukraine combined. As a result of the Ukraine crisis, Genius established an allowance for doubtful accounts of $0.7 million for its 2021 fiscal year, according to the aforementioned SEC filing. After generating $262.7 million in revenue in 2021, Genius projects Fiscal Year 2022 revenue of $340 million.
For Genius and its top competitors, the question now is if the business disruption will come from further losses in the region or the reputational harm of remaining active in the area.
“The ongoing conflict between Russian and Ukraine, uncertainty and disruption in the global economy and financial markets due to such conflict, and further escalation of geopolitical tensions could have a broader impact that expands into other markets where we do business,” Genius wrote in the annual report.