Model Portfolio Action: Initiating LSGAMB Index
Trade Structure: Long BETSB SS, FLUT US, SRAD US vs. Short DKNG US, GENI US
Model Portfolio Weight: 2%. Approximately 1.2% allocated to the long leg, 0.8% to the short leg, to preserve beta neutrality.
Risk Level: Pair-level drawdown capped at -20%.
Profit Objective: Open-ended, contingent on thesis evolution.
Executive Summary
This long/short construct isolates a structural divergence in the global sports betting and gaming value chain. On the long side: high-quality, multi-geographic platforms compounding cash flows and expanding margins. On the short side: narrative-fueled U.S.-centric names that remain highly sensitive to executional nuance, regulatory shifts, and probabilistic variance.
Our long basket: Betsson, Flutter, Sportradar, delivers demonstrable scale, cross-border insulation, and disciplined capital stewardship. Each company printed record Q1 results while maintaining operating leverage and strategic optionality.
Conversely, DraftKings and Genius Sports, while tactically competent, trade as if their paths to margin maturity are assured. They are not. The market’s optimism assumes flawless execution in structurally volatile verticals.
This pair trade, beta-neutralized, enables us to strip out market noise and directly monetize relative operational superiority, margin predictability, and geographic defensibility.
Longs
Betsson AB (BETSB SS)
Betsson exemplifies precision execution in a fragmented regulatory landscape. Revenue quality remains strong, driven by multi-jurisdictional growth, while cost discipline preserves margins amidst expanding local compliance burdens.
Latin America revenue +70% YoY, underpinned by record performance in Argentina and ramping momentum in Brazil and Paraguay.
Regional dispersion: CEE and Western Europe outpaced weakness in the Nordics (-19% YoY), illustrating systemic antifragility.
Proprietary platform architecture enhances scalability, controls, and product modularity.
€178M net cash enables both opportunistic M&A and shareholder returns without impairing strategic flexibility.
Flutter Entertainment (FLUT US)
Flutter is the dominant integrated operator across U.S. and international gaming. The FanDuel engine, structurally advantaged, margin-accretive, and cross-sell enabled, anchors the bull case. But it’s the global diversification and capital optionality that elevate Flutter above peers.
FanDuel U.S. share: 43% GGR, 48% net revenue; now operating at scale with 14.1% structural margin.
1M+ monthly iGaming players, reinforcing product-level stickiness and wallet share.
International segment: $2B revenue, $518M EBITDA in Q1, with 14% growth in SEA and 45% in India iGaming.
Simultaneous deleveraging and execution of a $5B capital return program.
Sportradar (SRAD US)
Sportradar operates as a systemic backbone for sportsbooks globally. Its breadth of content, upsell velocity, and expanding marketing-tech footprint compound into a vertically integrated, margin-accretive model with high client stickiness.
Net revenue retention: 122%, reflecting multi-product wallet expansion.
U.S. revenue +31% YoY, now 28% of consolidated revenue, scale has arrived.
Ads platform +36% YoY, with strong uptake across LATAM and Europe.
Long-dated rights agreements create margin predictability and enable multiyear FCF scaling.
Shorts
DraftKings (DKNG US)
"Revenue $1.409B (+20% YoY), adjusted EBITDA $103M. FY guide revised downward due to unfavorable sports outcomes."
DraftKings has achieved EBITDA positivity, but only marginally, and only with tailwind assumptions. Guidance was revised downward due to March Madness variance, an indictment of fragility, not strategy.
Hold rate dependency: Structural hold 10.4%, actual hold 9.5% due to results variance.
$111M EBITDA headwind from betting outcomes, highlighting model sensitivity to luck over process.
Geographic monoculture: U.S.-only exposure limits offset vectors; international upside absent.
Competes against FanDuel with lower scale, thinner margins, and limited product synergy.
Genius Sports (GENI US)
GENI is monetizing elite league partnerships, but with limited revenue granularity and soft media comps. Despite absolute growth, the business remains scale-constrained and media-adjacent exposure faltered in Q1.
NCAA March Madness data added, but no upfront cost, suggesting rights-based leverage still limited.
Betting segment strong (+44% YoY), but media revenue -26% raises sustainability flags.
Absolute EBITDA small; much of the growth still needed to justify structural valuation.
Share repurchase ($40M) signals confidence, but also hints at limited reinvestment vectors.
Structural Divergence Recap
We are long:
Multi-regional insulation
Embedded operating leverage
Capital allocation credibility
We are short:
Outcome-dependent earnings visibility
Execution bottlenecks in maturing U.S. OSB
Structural optimism priced in as certainty
Key Risks
Long basket:
Flutter faces UK/Irish tax harmonization risk.
Betsson Nordic contraction may persist.
Sportradar renewal risk with premium league rights (none yet flagged).
Short basket:
Genius monetization of NCAA and NFL data accelerates faster than anticipated.
DraftKings compresses promotional spend ahead of curve.
Buyback signaling induces sentiment floor.
Conclusion
Our long names are free cash flow engines with demonstrable strategic agility. Our shorts remain transition-phase operators dependent on variance compression and cost convergence.
The spread is live.
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