Genius Sports CEO Sees Prediction Markets Creating Durable Sports Betting Demand

Genius Sports (NYSE: GENI) CEO Mark Locke believes prediction markets will remain a significant part of the U.S. sports betting landscape, though the current iteration of the industry is likely to experience changes. The data provider is positioned to capitalize on that evolution. Genius Sports CEO Mark Locke says prediction markets are creating new demand for sports betting. The company is positioned to benefit. (Image: Shutterstock) Genius, which is one of the largest suppliers of data to traditional sportsbooks, recently secured event contract settlement deals with two of the leading prediction market operators, confirming what Wall Street has frequently discussed: The company is a beneficiary of yes/no exchanges’ sports-heavy expansion. But there’s more to the story. As Locke notes, bettors and traders want to, well, bet and trade while operators want to acquire their business and market makers need to supply liquidity. “Genius Sports supplies all three. We provide official data, settlement and integrity services to the platforms,” wrote the Genius CEO in a Monday letter to investors. “We sell data and pricing to the market makers who provide liquidity on exchanges. And through Legend and our wider media platform we help operators acquire the customers all of them are competing for.” Locke views “prediction markets as a net benefit for Genius” because the industry’s participants create new demand outlets for Genius data and more ways to monetize data the company is already supplying to other customers. ‘The Rules Will Change. The Demand Will Not.’ There’s ample discussion regarding exactly how much of a competitive threat prediction markets pose to legacy sportsbooks and the regulatory outlook for sports event contracts. Locke believes prediction markets are stoking new demand for sports trading/wagering and that demand will be durable over the long term even if the current all-or-nothing exchange structure isn’t. “Demand can endure while access narrows, activity falls or customers move between products. The distinction is between confidence in the underlying appetite for sports wagering and confidence in any particular platform’s current business model,” adds the Genius CEO. “Genius does not need to make the second bet to benefit from the first. If prediction-market customers do not stick, the activity returns to the sportsbooks we already supply.” Touching on the issue of the U.S. Supreme Court potentially hearing a prediction market case in the coming months, Locke notes an industry victory at the high court “would leave product rules, taxes and consumer safeguards open.” However, if prediction markets’ ability to continue offering sports derivatives is materially altered, Genius could benefit because after witnessing growing demand for prediction markets, more states could embrace regulated sports wagering, ensuring they get their slice of tax dollars. PAPSA-Style ‘Land Grab’ Could Help Genius, Too Some analysts see parallels between prediction markets’ recent customer acquisition efforts and what was seen in the sports betting industry following the 2018 repeal of the Professional and Amateur Sports Protection Act (PASPA) – a scenario from which Genius could derive benefit. “GENI is currently benefiting from PM customer acquisition activities, which we believe could mirror the 2018 repeal of PASPA that led to a customer acquisition ‘land grab’ by online sportsbooks,” says Texas Capital analyst David Bain. “It is worth noting that larger players working to acquire customers are extremely well-capitalized, in our view, and it is much harder to significantly change the market share dynamic after a market has matured. The framework has created a sweet spot for GENI’s Legend acquisition.” Bain adds that Genius, which provides essential liquidity to market makers, has hammered out deals with approximately 20% of the market makers in its pipeline — a group consisting of roughly 100 such entities. ***Disclosure*** Legend (referenced in the third paragraph) is the parent company of Casino.org. Genius Sports recently acquired Legend. The post Genius Sports CEO Sees Prediction Markets Creating Durable Sports Betting Demand appeared first on Casino.org.