Shortly after the Ukraine conflict broke out in late February, the NHL condemned Russia’s invasion into Ukraine, offering the most vigorous repudiation of the assault of any professional sports league worldwide.
At the time, the league suspended all commercial deals with business partners in Russia, including asports betting operator Liga Stavok. While a bevy of major sportsbooks stopped taking action on Russian sports as the war intensified, several top sports betting data providers continue to service the market, most notably Sportradar, the NHL’s gatekeeper for official sports betting data.
Over the last month, Sportradar CEO Carsten Koerl has faced criticism for his holdings in OOO PMBK, the holding company of Liga Stavok. Though Sportradar announced plans to halt new investments in Russia on March 30, the sports betting provider stopped short of pulling out of the country altogether. Now, as the Stanley Cup Playoffs approach, the NHL has remained mum on Sportradar’s Russian activities and Koerl’s stake in the sportsbook.
During a three-year period through the end of 2021, Sportradar generated revenue of €7.9 million from OOO PMBK, according to a filing with the U.S. Securities and Exchange Commission. Though Sportradar claims that Koerl does not have any operational responsibilities or authority within Liga Stavok, financial records indicate that he was PMBK’s largest shareholder as of last month (with a 23% beneficial stake in the company).
Last month, Sports Handle published a comprehensive feature on Sportradar’s activities in Russia, including Liga Stavok’s apparent ties to an ally of Vladimir Putin. In 2018, the U.S. Department of Treasury placed oligarch Suleiman Kerimov on a list of specially designated nationals in connection with money laundering charges he faced in (charges that were ultimately dropped). More recently, in March, the European Union placed Kerimov and 14 others on a sanctions list under a fourth sanctions package against Russia.
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
For top sportsbooks that offer in-play betting, Sportradar and archrival Genius Sports provide the rocket fuel that powers the in-game engine. Sophisticated managed trading services from leading data providers may take into a team’s probability of scoring on an empty net late in the third period if their opponent pulls a goaltender with a one-goal deficit. The low-latency feeds allow sportsbooks to update in-game betting odds in near real-time.
Consequently, there appears to be a conflict of interest when a CEO of a multi-billion-dollar data provider also maintains a stake in a foreign sportsbook that purportedly uses its feeds. The relationship can be likened to a company that develops proprietary software to facilitate high-frequency trading, then sells it to a stock exchange owned in part by an executive with ties to the firm.
As the Ukraine conflict escalates, Sportradar insists that sanctions prevent Koerl from divesting his stake in PMBK. Still, Koerl appeared to have ample time to exit his investment in the run-up to the war. Even after the invasion began, in a point of comparison, Chelsea FC owner Roman Abramovich announced plans in early March to put his club up for sale.
And while it hasn’t been proven that Sportradar continues to supply NHL official data feeds to Liga Stavok, the book continues to take action on the league. On Wednesday, Liga Stavok offered three props on Russian players ahead of the matchup between the Washington Capitals and the Vegas Golden Knights, including one on the number of shots on goal by Alex Ovechkin. One major U.S. book has stopped taking props on Russian NHL players since the war began.
The NHL did not respond to multiple requests to comment on Sportradar’s activities in Russia.
Inroads into Canada 2e22q
With the NHL’s Stanley Cup Playoffs approaching in less than two weeks, the league will enter new territory as bettors in Canada will be able to legally wager on the postseason for the first time since the nation decriminalized single-event sports betting last June. Behind the scenes, as the exclusive provider of NHL sports betting data, Sportradar will supply many of North America’s top sportsbooks with in-game trading capabilities for hockey over the next decade.
Sportradar, which counts Washington Capitals majority owner Ted Leonsis and Charlotte Hornets minority owner Michael Jordan among its investors, received an FanDuel as the league’s first-ever North American sports betting partners under a pair of expanded rights deals.
Before the start of the 2021-2022 NHL regular season, NHL Chief Business Officer Keith Wachtel told Sports Handle that the league did not come up with a projection on the Canadian sports betting handle for NHL games in the season.
The @NHL announced a pair of new multiyear partnership deals, making @FanDuel and @BetMGM the first-ever North American sports betting partners of the NHL, as both partners expand their rights into Canada. https://t.co/TkPqIJg8sD pic.twitter.com/z7sXcn9Rud
— NHL Public Relations (@PR_NHL) April 7, 2022
The NHL’s sportsbook partners will rely heavily on Sportradar to facilitate in-game betting during the postseason. Sportradar, which was co-founded by Koerl in 2001, also maintains data partnerships with the NBA, MLB, and NASCAR, among others.
Last July, the NHL inked a landmark 10-year sports betting partnership with Sportradar, about a month after the Senate of Canada opened the door to legal single-game sports wagering in a historic 57-20 vote. Under the deal, the NHL gained an equity stake in Sportradar worth as much as $90 million in stock options.
The NHL’s new 10-year gambling data and streaming deal with Sportradar includes the right to purchase up to 1.8% equity in the Swiss firm.https://t.co/se3GlNzCuO pic.twitter.com/7BGgzM1eYK
— Sportico (@Sportico) September 4, 2021
Equity buckets 4p574r
Within Sportradar’s annual report for the 2021 fiscal year, the company provided additional color on the equity stake offered to the NHL in the multi-year partnership. Under the deal, the NHL received equity options in three buckets, one of which the league exercised. Although the NHL purchased about $10 million in Sportradar stock, the league let another $30 million in options expire, according to an SEC Form 20-F filing. Those options were priced at the company’s IPO price of $27 a share. The NHL, according to the filing, purchased 1,116,540 options in October at a strike price of €7.59 ($8.25 based on Thursday’s conversion rates) per share.
Sportradar, which went public in September 2021, has lost more than 40% in value over the last several months amid global inflation fears and general bearishness in sports betting-related stocks. Sportradar traded around $14 a share in Thursday’s session, remaining near its 52-week low of $11.06.
The NHL’s decision to let the $30 million in options expire is just a function of valuation, a financial analyst told Sports Handle. It makes little sense for the NHL to exercise options in Sportradar at $27, when it is possible to acquire thousands of shares on the open market more cheaply. A third equity bucket, according to the filing, grants the NHL a warrant to buy another 1,353,740 shares at a price of €19.87 ($21.60). Those options do not expire before 2030, giving the shares time to recover.
🤝 Sportradar is proud to have ed the @NHL in partnering with @ligastavokru, the league’s first ever exclusive partner in Russia.
Find out more below ⬇️
— Sportradar (@Sportradar) September 30, 2021
As of Thursday afternoon, Sportradar had a market capitalization of around $4 billion, one that is considerably higher than Genius’ market cap of $789.5 million. In early April, Sportradar gained market entry into Ontario days after the data provider reported robust revenue gains in 2021, a year in which the company’s revenue shot up roughly 40% from the prior year.
Mario Stefanidis, vice president of Roundhill Investments, remains bullish on Sportradar after the company’s most recent earnings call. During Sportradar’s Fiscal Year 2021, the data provider achieved triple-digit revenue growth in its U.S. segment, while the company overall increased revenue by 39%.
“If the U.S. continues to grow like that, I think they’ll be at IPO price in no time,” Stefanidis told Sports Handle.
Sportradar chief executive Carsten Koerl says rapid growth of the US market should ensure revenue and earnings continue to rise in 2022, regardless of potential headwinds related to the Russian invasion of Ukraine.
https://t.co/yYy2Czq9kO— iGB (@iGamingBusiness) March 31, 2022
As for Russia, Stefanidis noted that it is hard to pinpoint why Sportradar remains in the country, especially when the company’s revenue from the region is viewed as immaterial to its overall business.
“I think it could be a matter of pride wherein the company has sought expansion in Russia as a potential revenue opportunity,” Stefanidis said.
A new twist 6y5s58
Sportradar and Genius maintain a practical duopoly on the global sports betting data marketplace with control of about 85% of the market, according to various estimates. Two others, Stats Perform and IMG Arena, have also dipped their toes into the market. Last week, reports surfaced that Genius continued to supply in-game betting feeds to Marathonbet.ru, weeks after the company claimed that it disabled all software used by Russian sportsbook clients. Genius does not consider Marathon to be a Russian entity.
While leading sports betting data providers are hesitant to disclose the full extent of their activities in Russia, there are still ambiguities on whether all four are servicing the Russian market. A finance expert who spoke to Sports Handle on the condition of anonymity would not be surprised if all four are still providing in-game data to Russian books.
Last month, @GeniusSports gave assurances that it disabled all software used by its Russian sportsbook clients. But now there are indications that Russian book https://t.co/5mUFryeYFJ used Genius data through at least April 5. Our story in @sports_handle https://t.co/qArcvrHPzW
— Matt Rybaltowski (@MattRybaltowski) April 18, 2022
After all, the competition for the Russian sports bettor’s ruble is fierce. Months before the Ukraine invasion, Putin signed an executive order last August that named Mobilnaya Karta as the unified payment operator for the Russian online sports betting market. Mobilnaya Karta (or Mobile Card in English) is a money transfer service that “is owned by shareholders of the Liga Stavok office,” according to The Bell, a Russian media outlet. The money transfer service, The Bell reported, has also been linked to Kerimov.
Kerimov, who has been described as one of Russia’s most secretive billionaires, has amassed a good portion of his stake from his family’s ownership in Polyus Gold, the largest gold producer in Russia. Last week, the Washington Post, in conjunction with the International Consortium of Investigative Journalists, published a 3,300-word feature on the challenges of tracking offshore funds associated with Kerimov.
Then, on Tuesday, NBC News reported that the U.S. government is attempting to seize a $325 million yacht located in Fiji that is reportedly owned by Kerimov.
One of the largest luxury yachts in the world may soon be in the hands of U.S. authorities after it unexpectedly sailed into Fijian waters last week.
The 106m Amadea's suspected owner, oligarch and gold tycoon Suleiman Kerimov, has been called a "Russian Gatsby" #PandoraPapers pic.twitter.com/VIiJ6Vc0Fh
— Russian Oligarch Yachts (@RUOligarchYacht) April 20, 2022
Addressing Wall Street analysts on March 30, Koerl indicated that Sportradar has complied with all sanctions in the region. Under a worst-case scenario, the Ukraine conflict could have a negative impact of €13 million on the company’s 2022 adjusted EBITDA outlook, he noted.
If there is additional scrutiny on Russian data providers, possibly in the form of heightened sanctions, Roundhill’s Stefanidis believes Sportradar will pull out of the nation since its business there is insignificant in the company’s full portfolio.
Stanley Cup odds 2x6q3a
Driven by the nation’s fervor for hockey, Koerl gushed last month that Sportradar is bullish on the Canadian market. Through Wednesday night’s play, three Canadian teams, including the Toronto Maple Leafs, were tracking toward qualifying for the playoffs. Second in the Atlantic Division with 108 points, Toronto has already clinched a playoff spot. Calgary leads the Pacific Division with 99 points, nine points more than second-place Edmonton.
The @MapleLeafs now own the longest #StanleyCup drought in of days in NHL history. 😳 pic.twitter.com/b36oc3jEid
— Sportsnet (@Sportsnet) July 3, 2021
The NHL is not the only major North American professional sports league that has a lucrative partnership with Sportradar. Last November, the NBA signed a multi-year deal with Sportradar that designated the company as the exclusive provider of worldwide betting data for the league. An NBA spokesman did not respond to a request for comment.
Sportradar served as the exclusive provider of the NFL’s official sports betting data feed during the 2020-21 NFL season, before Genius signed a landmark deal with the league last spring. The NFL has not commented on the current status of the Russian sports betting market.
As for the NHL, the Flames had odds on Thursday of +900 at FanDuel to win the Stanley Cup, third-best among the field. The Leafs were pegged at +1100 to capture the Cup, while the Oilers had steeper odds at +2500.
The Stanley Cup Playoffs are scheduled to begin on May 2, the 55th anniversary of Game 6 of the 1967 Finals, when the Leafs edged the Canadiens 3-1 for the 13th title in franchise history.
