During its Q2 earnings call on Monday, Sportradar outlined its strategic foray into the expanding predictions market in the US, detailing partnerships with Kalshi and Polymarket. However, the company warned that ongoing regulatory uncertainties, coupled with slower contract finalizations, would push significant financial gains to 2027 and beyond.
CEO Carsten Koerl spoke with analysts about the considerable commercial advantages that could arise from exclusive partnerships with prediction-market operators. He emphasized that these collaborations would broaden Sportradar's addressable market and diversify its existing sportsbook client base.
"With our premium content, global scale, and unmatched product portfolio, the predictions market is a natural adjacency," Koerl remarked. "It expands the US TAM by opening up new states, attracting new players, and increasing engagement with sports," he continued.
While Koerl and CFO Craig Felenstein kept details about the agreements with Kalshi and Polymarket limited, Koerl noted similarities to Sportradar's online sports betting offerings, suggesting that this new area would allow collaboration with "key players in the prediction market ecosystem, including exchanges, market makers, and brokers."
In June, Sportradar entered a multi-year global partnership with Kalshi, providing real-time data for trade settlement, fan engagement, and integrity services across major sports leagues including MLB, ATP, NHL, MLS, and UFC. The arrangement included mixed, fixed, and variable commercial elements, allowing Sportradar to benefit from potential increases in trading volume.
At the time of the partnership announcement, Koerl stated that prediction markets presented a compelling growth engine, asserting that Sportradar was positioned to shape this emerging landscape.
For the three-month period ending May 31, Sportradar's marketing and media services revenue rose by 16%, largely due to increased spending from the prediction market sector. Citizens analyst Jordan Bender remarked in a follow-up note that this trend is likely to persist in the coming months, especially with several well-funded companies entering the market during the NHL and NBA seasons.
Despite potential market fluctuations over the next decade, Citizens is optimistic that prediction markets will ultimately benefit Sportradar, leading to an increase in its EBITDA margin estimate to 25.1% for the next fiscal year, up from 23.7% for 2026.
On the same day as the Kalshi partnership, Sportradar signed a multi-year agreement with Polymarket, providing TDI (Tennis Data Innovations) data that enables registered Polymarket users in the US to access live data for around 20,000 matches each season, which includes streaming services and exclusive contracts for events.
During the earnings call, CFO Felenstein addressed how the terms of these new agreements contrast with traditional sportsbooks. He explained that the deals involve both fixed and variable fee components, allowing Sportradar to capture potential upside as the market grows. He emphasized that each agreement would vary depending on what each market entity aims to achieve.
Felenstein elaborated, "We want to ensure that the economics are mutually beneficial for us, our prediction market partners, and our existing online sportsbook partners. We’re finalizing diverse deals that encompass data, odds, fan engagement tools, and marketing services, generating a wide range of revenue opportunities."
Koerl expressed optimism about finding the right framework for these deals, highlighting the importance of low latency and deep data. He remarked, "There’s a myriad of opportunities moving forward with regards to prediction markets."
Sportradar positioned its ultra-low-latency feeds and advanced data capabilities as key differentiators, pointing to immediate ball-tracking data for tennis as an advantage. Koerl stated, "We are excited to partner in this rapidly growing segment of the sports market, showcasing Sportradar's unique value proposition."
Looking ahead, Koerl indicated that further partnership deals are likely in the works, and when asked about potentially acting as a market maker, he clarified that Sportradar would concentrate on supporting market participants through services similar to its Managed Trading Services designed for sportsbooks.
Management anticipates that revenues from prediction markets could reach “tens of millions” by 2026, and despite the delays in contract signings, there was still a noted impact on earnings in Q2. Felenstein reported that "SportsContent, Technology & Services revenues reached €64 million ($73.9 million), a 9% increase year-on-year," attributing this growth to heightened affiliate marketing spending related to predictions, along with sportsbook acquisition efforts.
He noted that while prediction markets had a limited impact during the last quarter, they are expected to boost growth in the latter half of the year as Sportradar expands its addressable market. Revenue growth for the full year in 2026 is projected to be between 19% and 21%, translating to an expected €1.518 billion to €1.533 billion in total.
Koerl acknowledged that prolonged negotiations and delayed league approvals had hindered revenue realization. He stated, "We anticipated predictions to begin at the close of Q1, but it took longer than expected to finalize everything. The delays in moving forward are partly due to needing league partner approvals. Consequently, this has pushed back revenue timelines and adjusted our expectations for the year, even as we expect a strong second half, particularly driven by prediction markets."
The revenue outlook will also depend significantly on the regulatory landscape for prediction markets across the US, Koerl observed. He said, "This hinges on the legal framework and compliance in this sector, which remains fluid."
Sportradar has faced challenges including pressure on its stock due to uncertainties surrounding prediction markets and allegations from short-sellers, which the company has denied. Following reports from Callisto Research and Muddy Waters Research in April, shares dropped approximately 20%. These reports claimed Sportradar relies heavily on illegal markets, an assertion the company characterized as "factually inaccurate."
In response to these allegations, Koerl emphasized the company's rigorous compliance measures in place through its audit committee, stating, "Our contractual protections ensure that the products used by our customers comply with applicable laws."
The company's stock closed at $12.91 on Monday, slightly up from the previous day. It traded at $12.73 in mid-day trading on Thursday, remaining essentially unchanged. Citizens maintained a "market outperform" rating but revised the price target from $24 to $20 per share.
On the status of US prediction markets, Kalshi initially focused on political-event contracts after securing a crucial court ruling ahead of the 2024 Presidential Election. On Election Day, the platform processed $245 million in trading volume, contributing to a monthly total exceeding $1 billion.
Following this, Kalshi introduced sports-event contracts shortly thereafter. The US Commodity Futures Trading Commission, the federal regulator for derivatives, proposed restrictions on sports and political event contracts in 2024 under President Biden but has shifted its stance under President Trump, now asserting exclusive jurisdiction over these contracts.
Historically, regulation of sports betting has been the responsibility of individual states, leading to conflicts between advocates of state rights and supporters of federal regulations. More than a dozen states have launched lawsuits against Kalshi and Polymarket, while a bipartisan group of 44 state attorneys general has opposed federal intervention in the issue.
Governor Kathy Hochul and Attorney General Letitia James from New York filed a significant lawsuit against Kalshi demanding $36 billion in compensatory damages. This lawsuit has intensified a pre-existing conflict between Trump and James. In December 2023, Michael Selig was confirmed as chairman of the CFTC and has consistently supported prediction markets amid state-led litigation.
In view of the legal challenges, Felenstein expressed that as long as clients are allowed to operate in their jurisdictions, Sportradar will continue to support them, stating, "From our perspective, we are going to serve our clients as long as they are permitted to operate."
