• In a voluminous 123-page report, Muddy Waters claimed 20-40% of Sportradar’s revenue flows from clients operating illegally.
• The report alleged Sportradar “intentionally combines a ‘check-the-box’ KYC review with a ‘see nothing, know nothing’ approach to illegal markets.”
• Muddy Waters said it identified 47 clients with in-code evidence of live Sportradar connections to illegal markets, including 34 operators, 11 API providers and resellers.
• In a separate report, Callisto Research claimed that after reviewing source code across thousands of gambling sites, it identified more than 270 platforms using Sportradar products while operating without appropriate licenses in their target markets.

Who’s who: Muddy Waters named Stake.com, 188Bet/Taptap, Yabo, 8xbet, SBOBet and OKVIP as direct or indirect customers. Callisto alleged two former employees confirmed 1xBet is among Sportradar’s top 10 clients.

Official response: Sportradar issued a statement yesterday challenging the reports as containing “several factual inaccuracies” and characterizing the authors as “short sellers trying to erode shareholder value and profit from stock disruption.”

• The company said it “works exclusively with licensed operators, follows strict global compliance, and due diligence standards.”
• It said it stood by its audited financial statements and information provided to regulators.

Follow the processing: The analysts at Stifel said they were “still processing” the report but “net-net, we agree there may be some, mostly legacy pre-IPO, ‘bad’ revenue exposure that may need to be cleaned up eventually to de-risk regulator penalties.”

• However, the team added that they “think the quantum” of revenue exposure is being “massively over-estimated.”

The sting: Still, the team admitted that the “breadth of analysis and interviews with former employees (including what was effectively a sting operation at this year’s ICE conference) is noteworthy and argues for more black end market revenue exposure and bad actor risk.”

• “We think this explains the ‘shoot first, ask questions later’ sell-off today vs. more moderate reaction to prior short reports,” they added.

Talk like a pirate: But the Stifel team added that it is “important to distinguish between Sportradar data/products showing up on illegal sites vs. actual commercial agreements.”

• “We understand there are many illegal companies/individuals that steal data and products, and distribute out to black market operators without Sportradar’s involvement,” the analysts said.
• The team added that they understood the company as having procedures in place to identify these instances, “though we view this as a perpetual ‘whack-a-mole’ game.”
• “Certainly, former employee quotes on specific operators are difficult to refute, though we think ‘customers’ identified via code-scraping tools may be accessing data/products illegally.”

Telling teacher: Callisto said it has shared its findings with multiple regulators in North America and Europe ahead of publication, alleging that three US gambling regulators have already commenced reviews.

• Neither report named the regulators and none have so far confirmed an investigation publicly.
• Sportradar holds B2B supplier licenses in the UK, Malta, Sweden, several EU jurisdictions, Ontario and a number of US states, including New Jersey.
• Various regulators have previously given notice that they are now looking more closely at B2B relationships with licensed providers, including the UK and Sweden.

🍿Diary date: Sportradar is set to report its Q1 earnings on May 6.

Plunge: short sellers achieve their aim