Genius Sports reported that revenue increased by almost 65% this quarter, with a large portion of the company’s income reportedly coming from commissions on microbetting.
Overall revenue reached $195 million for the second quarter this year, with $117 million (60%) coming from its betting technology segment.
A lawsuit filed against the company alleges that Genius receives a commission on every microbet placed at DraftKings and FanDuel. Amid a rise in the popularity of these in-play wagers, this accounted for $126.1 million of its revenue last year.
The company did not break down how much of its betting revenue came from microbets in its Q2 results, but noted that the segment grew revenue by 27.5% year-on-year.
Stock Price Partly Recovers After Legend Acquisition
Genius completed the acquisition of digital sports and gaming media network Legend in February this year. Investors appeared concerned at the deal, which could see Genius pay up to $1.2 billion, and the company’s stock price crashed by over 35%.
The price has been recovering since then, but has yet to reach pre-acquisition levels of around $8.54. It is now at $7.83. The reaction to its Q2 earnings release was mixed. While revenue grew substantially, losses also increased. The company reported an overall loss of $76.7 million this quarter, up from $53.9 million in the same period last year.
The losses were largely attributable to the Legend acquisition, with operating losses down from $80.7 million to $55.6 million.
Wells Fargo downgraded the stock’s rating from overweight to equal weight at its current price. The firm did not downgrade the stock immediately after the Legend acquisition, but said it needs to see more evidence that the deal will create long-term value.
On the back of its results, the company raised its full-year guidance to just over $1 billion and its adjusted EBITDA guidance to between $285 million and $295 million.
Legal Costs Mount As Company Defends Lawsuit
The cost of fighting the lawsuit alleging Genius is complicit in encouraging harmful microbetting was added to total litigation expenses, increasing them from $2.1 million to $28.9 million.
In its response to the lawsuit brought by two self-confessed gambling addicts, Genius said it is an innocent third-party and merely provides data to partners such as FanDuel and DraftKings.
It cites previous rulings that have asserted that sportsbooks do not owe a duty of care to compulsive gamblers and adds that if this is the case, then “Genius—an upstream data supplier with no alleged customer relationship, no control over the Sportsbook Apps, and no direct contact with Plaintiffs—certainly does not.”
Prediction Market Partnerships Could Lead to Further Scrutiny
This week, Genius announced partnerships with both Polymarket and Kalshi. It will provide the companies with official, real-time event data and league integrity services.
“Prediction markets will scale on a foundation of trusted, fast, and accurate data, reliable technology, and robust integrity services, and that is exactly where Genius Sports is uniquely positioned,” said Sean Conroy, EVP of Rights & Partnerships, at Genius Sports.
As part of the deal, it will provide live streaming services to Polymarket for Italy’s Serie A and Kalshi with data from a range of soccer leagues, including the English Premier League.
Conroy added that the deals will also protect sporting integrity as the two operators commit to sharing data to identify irregular trading patterns.
“As the category continues to grow, robust integrity safeguards are not simply optional; they are foundational,” Conroy stated.
The financial details of the agreements have not been disclosed, so it remains unclear whether the company receives any commission on live markets, as it allegedly does with DraftKings and FanDuel.
