It’s big.

It’s huge.

If the short sellers’ reports by Muddywaters and Callisto are true, this is the end of Sportradar. There is no possible way for the company to survive.

Note, please, the – if these reports are true – part.

However, the vultures are circling. America being America, class action lawyers have set up shop trawling for customers. Three different sets of government regulators are – purportedly – reviewing the company’s actions. The stock fell 22.6% in one day.

Sportradar is not just a sports company or a gambling company, in some people’s view, it is the “anti-corruption agency” for sports.

They are not an anti-corruption agency and they have a huge problem.

When I was in Moscow researching a TV documentary about the close personal, political and financial links between star National Hockey League (NHL) players and the Russian mafiya, one of my interviews was with an organized crime police officer. I am asked him whether the story was true. He confirmed it, but said, “Don’t worry! The NHL players only work with the nice Mafiya.”

The problem is that if you are a NHL player, there is no such thing as a ‘nice’ Mafia to be working with. Sportradar, if these allegations are true, is in the same place. If half or a quarter or even a tenth of the short sellers’ reports are true, Sportradar has an existential problem.

The breadth and extent of the allegations against Sportradar are staggering: contacts with banned, sanctioned Russian oligarchs; commercial links to human traffickers; close relationships with Turkish mobsters: 270 large customers that are criminal bookmakers; and the very basis of their corporate profits linked directly to the illegal gambling market. These issues are known in the C-Suite and the company directly lies about it all. This is the substance of the allegations (unproven as yet in a court of law) against Sportradar.

These are not ‘nice Mafia’ issues. If you are a sports integrity company you cannot afford to have even a small part of these allegations be true. If you are a sports league you cannot afford to be doing business with such a company if even a small part of these allegations are true.

Let’s take a look at these allegations – always with the idea that they are, at this moment, simply unproven stories. First, an explanation to readers who do not follow sports gambling, why this is a massive story for you.

Why You Should Care

Sportradar is a giant. It works with the National Basketball Association (NBA) & Women’s NBA (basketball), Association of Tennis Professionals (ATP) (tennis), NHL (hockey), NASCAR, Professional Fighters League (PFL), United Soccer League, Bundesliga (German soccer), UEFA (all of European soccer). Major League Baseball (MLB), arguably one of the most symbolic of all American sports, has equity stakes in the company.* FIFA – the organization that runs all soccer in the world – essentially, shut down much of its integrity department and outsourced the work to Sportradar. The company is, largely, in charge of protecting the integrity of the upcoming FIFA World Cup tournament (Good luck with that task! Match fixing at the World Cup is a constant problem because … Editor’s note – Declan please stick to this story. You will write more about match-fixing at the World Cup in another article! )

Remember, pre-May 14, 2018 when sports gambling was illegal in North America and the sports leagues professed to hate gambling? A lot of leagues actually loved gambling because it stimulated interest in their sport but they had to pretend not because it threatened the integrity of the product with fixing and corruption.

Sportradar did away with all those concerns. Their argument, that convinced sports leagues everywhere, was that they would monitor all the betting odds and warn sports leagues if/when there was any corrupted, odd movements in the gambling market that signaled match-fixing.

Cue a massive, societal shift led by sports leagues to get into gambling. Actually massive does not really begin to describe the shift. Now, it is impossible to watch almost any professional sports event without being bombarded with gambling advertisements.

Sportradar helped pave that transformation, except that their role is fundamentally misunderstood by most sports people.

Data – the Gold Dust of the Sports Industry

Sportradar is not really a sports integrity company, it is a data company that happens to do sports integrity. Their real profits come from making deals with leagues for the data from the sports events. Data means fast, access to information like who is scoring the next point, how are they are scoring it, the numbers on all the players jerseys, whether the next serve will be left or right handed, if a team wins the first half/quarter but loses the game, or if the pitcher will throw a ball or a strike. There are thousands of data points in every sports event and Sportradar vacuums up that information in exclusive deals with sports leagues and sells it in-real-time to bookmakers. This data is worth billions of dollars to bookmakers. It is the life blood of their product.

What this means is a three-way conflict of interest: the sports leagues hire Sportradar to monitor their integrity and sell them their data: Sportradar sells the data to the bookmakers: the bookmakers sponsor the sports leagues. Thus, no one has an interest in discussing any major match-fixing or corruption issue as it will effect their bottom line.

Even for a relative expert like myself, the reports feature hundreds of pages and dozens of mind-boggling, alleged conflict of interests between criminals, Sportradar and their charismatic chair Carsten Koerl. So I will focus on only one important and seemingly systemic issue.

The Long Tail of Addiction

In 2018, professional tennis finally got around to recognizing the extent of match-fixing in their sport. Independent investigators called it a “tsunami” in the lower levels of tennis. They proposed a novel solution – ban betting on these lower levels where players don’t get paid very much. The argument was simple: no betting data, no gambling, no fixing. Sportradar provided bookmakers with data on these matches. The investigators strongly recommended that this relationship end. Sportradar fought back with the argument that if they did not supply the data to bookmakers illegal operatives would provide it and tennis would not get any money for it.
I never understood the debate. Why did it matter? Why was it worth all this money to get betting data on small games in small tournaments. It seemed a waste of time for Sportradar, bookmakers and the tennis industry: very little benefit with lots of risk of match-fixing.

The argument presented in the short seller’s report – again unproven – is that these games are actually massively important for the entire gambling industry. It ties in with a dark secret at the heart of the gambling that almost everybody knows but few people talk about in public: much of the betting industry is driven by addicts.
I interviewed an illegal bookmaker in the Philippines. He was British and had worked both sides of the fence, he said: “The real business model of a lot of bookmakers is rely on the degenerates. They will talk about ‘family entertainment’ but really the average gambler is a loss to these bookmakers… The real money is to be made by identifying the heavy loser…The kind of person who would gamble away the baby’s diaper money.”
These words are supported by a 2021 report for the House of Lords from the charity – Gambling Aware.Their research showed that 86% of the profits of legal, sports bookmakers come from only 5% of their clients. The key to become a successful bookmaker is to find as many of the 5% as possible and supply them with what they want.
Addicts need their gambling fixes 24/7 – 365 days a year. They may start their betting addiction on games in large leagues but an important part of a bookmaker’s product line is the ability to supply games wherever in the world at whatever time an addict wants to bet.
There was a bookmakers shop in the working class area where I wrote my doctoral thesis. I would go in there cup of tea in hand (alcohol was banned). There were people who come in and bet on the big, old school bets – who would win the next Premier League game – but much of the clientele were the dozens of addicts who hung around the shop ready to bet on anything. Every ten minutes or so the bookmakers would have computer generated greyhound races. AI animated dogs would run around a fake track, while an announcer – also fake – would shout out the commentary. This was the product that kept the regulars coming back: events that kept the dopamine in their addicted brains looped in.
This is why supplying data for small leagues and small games is important for Sportradar. This is the kind of service that helps their bookmarking clients make lots of money. This ‘long tail’ goes deep in gambling and Sportradar, specifically, helped developed interest in niche games and leagues: Polish ping pong players batting the ball back and forth in empty gyms. One deranged bettor in Oregon, allegedly, bet $35,000 dollars on one of those games.
All this is not illegal. It is the way of the gambling world. Micro bets which allow corrupted Major League pitchers are based on this kind of gambling, but it is not particularly moral nor does it protect sports against match-fixing and if you are Sportradar that is supposed to be what you do.

The Caveat

A couple of obvious points. You build up a multi-billion-dollar company, like Sportradar, in less than twenty-years you are going to make a lot of enemies. Some of those enemies had a hand in crafting these reports. Their business rivals are probably dancing in delight and opening bottles of champagne. The reports were written by short sellers, meaning the whole point of the reports are that they are designed to make a company’s shares decline – job done.

Carsten Koerl, the CEO of Sportradar has responded by writing on LinkedIn and in an investors call, (April 28) that the claims are, “False, misleading and defamatory…We do not work with black market operators. For the grey market, we have a solid compliance structure in place, and we only work with licensed operators… I get a lot of support from all sides. Some regulators contacted our teams, they explained to them the situation, and that’s an ongoing process.”

This may be true, but Sportradar has a very tough road ahead – because if only a small portion of the short sellers claims are proven than it has a ‘nice Mafia’ problem and their company should be folded up and put out with the trash.

** Note in an earlier version of this post I made the mistake of claiming that the National Football League were still had an equity stake in Sportradar. They used to have these shares but no longer… My apologies for the error.