Buy Sportradar Stock. The Sports-Gambling Data Company Could Win Big.

The Swiss-based Sportradar is the world’s leading provider of sports data and play-by-play tallies for the betting industry. Its thousands of correspondents collect data on some 680,000 events a year, in 80 sports, played in more than 120 countries. For many bettors, the wagering is mobile and live throughout a match or a game: You can easily bet on the next play or an upcoming penalty kick.

Revenue has been growing at a 30% annual clip, as the company serves a global sports betting market that could reach $70 billion by the end of the decade. Yet since its Nasdaq debut in September, Sportradar stock has sunk by a third to a recent $18. That values the enterprise at just under $5 billion, and at a discount to its much smaller rival Genius Sports (GENI), as measured by 2022 revenue estimates. Investors are underplaying Sportradar’s growth prospects.

The U.S. holds obvious growth opportunities for Sportradar. As more states legalize sports betting, analysts like J.P. Morgan’s Daniel Kerven figure that bookmakers’ gross revenues will rise from some $4 billion to $14 billion by decade’s end. Currently, Sportradar takes 1% to 2% of that betting “handle” for its game data. But it aspires to boost its take-rate above 13% by delivering other services, including ads, live video feeds, and odds for each player’s points, penalties, and substitutions.

As in-game betting becomes available around the U.S., Sportradar believes these more exciting, emotional wagers will supplant pregame bets. “The U.S. betting market—it’s like Europe was 10 years ago,” says Sportradar CEO Carsten Koerl, “In the U.S., 70% to 80% of all betting is prematch, over all sports. In all other world markets, it’s the opposite.”

Koerl founded Sportradar in 2001, and holds about a third of the company’s shares and most of its voting control. Analysts polled by FactSet see the company’s revenue growing to $750 million in 2022 from about $620 million this year. Earnings before interest, taxes, depreciation, and amortization, or Ebitda, are forecast to reach $145 million in 2022 from $115 million this year.

J.P. Morgan suggests that Sportradar revenue will grow at about 20% a year through 2025, reaching $1.3 billion, with $300 million in Ebitda and earnings per share of 57 cents. Analyst Kerven rates the stock at Overweight, thinking it could hit $27.

Koerl has expansive ambitions to broaden Sportradar’s services within the betting industry and beyond. In addition to pre- and postgame data, the company now manages live odds-making and betting services for hundreds of small and midsize bookmakers around the world, effectively serving as their back-end trading platform while the bookmakers themselves focus on marketing.

Sportradar would like to provide this outsourced betting technology platform to the biggest bookmakers, establishing the company as a sort of computerized market maker, much as you’d find in securities markets. It won’t be easy to sign up the very top bookmakers, however: Biggies like DraftKings
(DKNG) and Penn National Gaming (PENN) have been investing lately in their own data technology “stacks” to better control their margins and their fates.

Another industry trend worth watching is the appetite of sports federations for bigger pieces of the betting pie. Sportradar rival Genius Sports has cut expensive deals to become the exclusive betting-data partner of English Premier League soccer and the National Football League. Sportradar has been shadowed by fears that league linkups would become increasingly costly.

Those fears should be allayed by a recently expanded deal with the National Basketball Association that takes it to 2030. The deal is a plum for the company—the league gets warrants worth 3% of its shares—because betting on basketball is bigger than on either football or baseball. And that’s a key metric for Sportradar.

Write to Bill Alpert at [email protected]