Kalshi vs. Polymarket? This Small‑Cap Sports Data Stock Is the Surefire Winner Either Way.
Key Points
Genius Sports is the raw data layer for sports leagues and betting markets.
It could see a nice tailwind from the prediction markets boom.
The stock looks cheap after its acquisition of a gambling affiliate group.
- 10 stocks we like better than Genius Sports ›
Prediction markets may be the future of betting and financial markets. Start-ups like Kalshi and Polymarket are seeing trading volumes grow like gangbusters, while traditional trading platforms like Interactive Brokers are making a major push to capture this innovative way to trade on real-world events.
Too bad for investors, but you cannot buy stock in Kalshi or Polymarket today. However, you can invest in the hidden data provider powering these rapid-fire betting markets. The company's name is Genius Sports (NYSE: GENI), and it may just be a hidden gem for investors to ride the wave of digital betting markets around the globe.
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Here's why you should consider adding Genius Sports stock to your portfolio today.
Sports data for betting markets
Genius Sports is a mini-conglomerate of assets connecting to the sports betting markets. It has partnerships with some of the largest sports leagues to provide data transmission -- sometimes using hardware on the field of play -- directly to sports betting platforms like FanDuel. This is a competitively advantaged business, as it is usually the sole data provider for these leagues, which it can then sell to as many third parties as it wants.
Last year, betting technology revenue hit $471.5 million, up 33% year over year, riding the wave of mobile sports betting in the United States and abroad. Kalshi and Polymarket are two prediction markets that should have significant use for Genius Sports' data, given the importance of up-to-date information, but Genius has not yet sold it to them because of the regulatory gray area these platforms operate in with regard to sports betting. If they get the full green light from regulators, Kalshi, Polymarket, and others should provide a nice growth tailwind for Genius Sports in the years ahead.
Genius is not just a sports data provider now. It has a media segment that uses its data to support advertising. The segment grew 37% year over year to $144.5 million.
Recently, Genius closed a $1.2 billion acquisition of Legends, a company that runs a network of affiliate websites for the betting industry. This will not only allow Genius to sell data to sportsbooks but also make money when a customer signs up through Legends' websites.
Image source: Getty Images.
Time to buy Genius Sports stock?
With Legends in the fold, Genius expects revenue to reach $1.1 billion in 2026, along with over $300 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Compared to a market cap of $1.13 billion, these earnings look rather cheap.
If you are a believer in the long-term tailwind of betting markets around the world -- including Kalshi and Polymarket -- Genius Sports stock may be a cheap way to get in on the action. Going to the casino is usually an unwise financial decision. But owning a stock in the casino supply chain should be highly profitable.
Should you buy stock in Genius Sports right now?
Before you buy stock in Genius Sports, consider this:
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Brett Schafer has positions in Interactive Brokers Group. The Motley Fool has positions in and recommends Interactive Brokers Group. The Motley Fool recommends Genius Sports and recommends the following options: long January 2027 $43.75 calls on Interactive Brokers Group and short January 2027 $46.25 calls on Interactive Brokers Group. The Motley Fool has a disclosure policy.
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