TransUnion: Entry Into U.S. Sports Betting Tech Is A Milestone

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Summary

  • The company’s extensive data capabilities play heavily into its potential to serve sports betting operators with everything from onboarding, to granular data sets, fraud detection, and marketing heft.
  • Its technology in credit reporting can be marketed as an insurance policy against firewall breaching that can add to overall security.
  • Its move raises the stakes for the entire subsector of pick-and-shovel tech providers to sports betting platforms.
  • Looking for a portfolio of ideas like this one? Members of The House Edge get exclusive access to our model portfolio.LEARNMOREData is the new oil… ” recent trope around Wall Street.

    For perspective, remember this date: Jan. 10, 1901. It’s when a Texas wildcatter watched stunned as his well at Spindletop Hill near Beaumont, Texas, blew a gusher, pouring out a then unimaginable 100,000 barrels a day. From that day forward, the world changed. The immense surge of black gold that spewed out from Spindletop quickly poured upstream as it were, into the pockets of Wall Street traders snapping up shares of stocks that became Gulf, Texaco and what is now Exxon Mobil (NYSE:XOM). Now take a leap forward to July 5,1994, the first day an online bookseller dubbed Amazon.com (AMZN) quietly unleashed its technology on book buyers around the world. And again, the world changed and is still changing as data migrates from the box on one’s desk to the cloud.

    Tucked in between these watershed events was by comparison only a trickle event, but by any means a game changing gusher as well. On May 10, 2018, the US Supreme Court struck down the PASPA law which had been the principal barrier to the states legalizing sports betting. The data revolution already was surging and the marketers of betting platforms leaped on its back with a growth arc no less powerful in its way than that original oil gusher more than 120 years ago.

    Carl Icahn is said to believe that Wall Street reportage tends to exaggerate news. If bullish it goes into paroxysms of joy over certain stocks, if bearish, it growls dire warnings. But either way, too much reporting tends to hide gut level truths. It’s between these Netherworlds of bloviating that true values can be dug out. And it’s where guys like Icahn have made their billions seeing what blurs the eyes of others.

    So has the flood tide of opinion on sports betting stocks gushed over the investment world since the PASPA decision. There has been much puffery. But the enduring truth still emerges: Data is indeed the new oil and the sports betting sector stocks are creatures of the skill sets in creating and exploiting that data. The rapid transformation from a single state monopoly in Nevada since way back in the day, to a 20 state matrix of legal sports betting jurisdictions in just three years, is stunning.

    In just those few years, the total handle of legal sports wagering has risen to a cumulative $47b, throwing off $3.3b in revenue to the 20 companies now in hot pursuit of every new state that goes legal. We expect legal states will number 38 when the inevitable brick wall is hit by 2025/2026.

    Estimates of the size of the sports betting market run the gamut of $30b to $40b to over $119b by some of the heavy breathing analysts. Based on current revenue flow, we settle in around $30 to $40b. No small change for sure. This is an industry in a hurry and no wonder. It’s continuing mastery of the arts black box and otherwise, of data, and gets better by the day. And that brings us to the latest uninvited guest to the sports betting gala: TransUnion (NYSE:TRU), yes, that company, one of three whose score pronouncements from on high determine if you’ll get that mortgage, qualify to buy that Maserati, get that SBA loan, etc. And now, who you are and what you bet. And ID’s deadbeats in seconds.

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