UK-based sports data firm chooses Wall Street for $1.5bn stock market debut

It has been clear for some time now that data is the new gold.

Like gold, though, data must be carefully mined and equally carefully finessed into an end product customers desire.

One business sector that has proved adept at this is sports betting – the field from which the latest company to come to the stock market via a merger with a SPAC (special purpose acquisition company) has emerged.

Genius Sports, a London-based company, today made its debut on the New York Stock Exchange with a nominal valuation of $1.5bn (£1m).

SPACs, sometimes referred to as “blank cheque” companies, have been the biggest investment craze of the last year or so.

Essentially, they are companies that float on the stock market with no assets, but which raise a sum of money from investors, sometimes running into billions of dollars, with the specific intention of merging with a private company looking to come to market.

For companies looking to obtain a stock market listing, they represent a quick and cheap way to do so, particularly for young or loss-making businesses that do not necessarily have the established track record some investors look for.

One big question frequently posed about a lot of the companies coming to market via a merger with a SPAC is the timing.

Some businesses have seemed rather opportunistic in their rush to obtain a stock market listing.

But Mark Locke, the co-founder and chief executive of Genius, insisted the timing was “perfect”.

He told Sky News: “We’ve been through a very high growth phase and we’re really looking to accelerate that next phase of growth through access to markets… to drive acquisition and also organic growth.

“We’re really excited about the opportunities ahead.”

Mr Locke denied that, as a British company, he would have preferred to have floated on the London Stock Exchange which, currently, has stricter listing rules – although the government is seeking to change this in order to attract more SPACs and more fast-growing tech companies to list in the UK.

He added: “What we’ve got in New York is an incredible opportunity with the investor base we’ve been able to access.”

Mr Locke said that, as the US was one of the company’s fastest-growing markets, it also made sense to list there in terms of raising the company’s profile.

Genius Sports has an interesting story.

Its origins lie in Betgenius, founded 20 years ago, which initially started out providing an odds comparison service and an “aggregation service” that allowed punters with more than one online betting account to view all of their account balances in one central place.

It later evolved into providing “betting solutions” for partners, such as Racecourse Media, the umbrella organisation that controls the media rights for 34 British racecourses, as well as providing data provision and analytics services to clients such as La Liga, Spain’s top professional football division.

Collecting that data and selling it to gaming firms is now the biggest and most important activity for the business which, in 2015, was rechristened Genius Sports.

It is now partner to more than 500 sports organisations around the world, including the Premier League and, in the United States, the NFL, the National Basketball Association and Major League Baseball.

Many of these partnerships are on an exclusive basis.

Genius reckons to supply data on more than 240,000 individual sporting events annually, of which, around 100,000 or so are on an exclusive basis.

The buyers for this data include more than 300 betting and sportsbook operators with which the company has relationships.

That exclusivity is fiercely protected.

Genius Sports is currently involved in a legal battle with its Swiss-owned rival, Sportradar, which has argued that the Premier League’s decision to award the company an exclusive licence breaks competition rules.

Genius, in turn, has taken legal action against Sportradar and individual “data scouts” the latter has paid to attend sporting events and send it updates on their mobile phones.

Ironically, the NFL – which recently switched to Genius from Sportradar – is a shareholder in the latter, which is also reportedly looking to come to market via a SPAC.

The NFL has also taken a stake in Genius itself following the inking of its recent partnership.

Mr Locke said: “Exclusivity helps those sports leagues [with whom we work] make the best of the products that they have.”

He said the company was also detecting some interesting trends in terms of its clients in sport, betting and the media.

Mr Locke went on: “We sit at the heart of the ecosystem that drives sport, betting and media.

“What we do as a business is that we connect those three areas – we connect the sports market, the betting market and the media market and increasingly we are seeing a convergence of these three areas coming through as sports continue to evolve and look for more fans.”

Diplomatically, Mr Locke would not be drawn on whether Genius would have liked to have partnered football’s abortive European Super League, although he did appear to accept, at least partly, the rationale for the competition.

He added: “The funding of sport is really under threat.

“And what we’re really looking to do is help engage… fans and help them access their sport in all sorts of different ways.”

Investors appear to like the story.

Shares of Genius, which came to market via a merger with a SPAC called dMY Technology Group II, were up by more than 11% on dMY’s closing price on Tuesday evening when trading began today.

That is perhaps unsurprising when Genius Sports enjoyed a 27% rise in sales during 2020.

The question is whether it can maintain that level of growth once lockdowns are over and sports fans have more ways of spending their money and spare time than sitting at home watching TV and betting.

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