NBA’s Jordan, Cuban and Leonsis Go on a Betting Streak

(Bloomberg Opinion) -- Sportradar AG, a Swiss startup that provides sports data to gambling companies, media outlets and professional leagues, went public recently in an initial offering that paid off handsomely for some early investors.

That group includes basketball legend Michael Jordan and two other businessmen, Mark Cuban and Ted Leonsis, who, like Jordan, own National Basketball Association franchises. Each of them owns less than 5% of Sportradar’s shares, according to the company’s prospectus. That makes their holdings worth as much as $350 million each, based on Sportradar’s $7 billion market value. Todd Boehly, who owns stakes in the Los Angeles Dodgers and DraftKings Inc., a sports betting platform, is also a Sportradar investor.

Sportradar also has partnerships with the NBA itself in addition to ones with the National Hockey League, Major League Baseball, the National Association for Stock Car Auto Racing, the Federation Internationale de Football Association and the Union of European Football Associations. The National Football League has an equity stake in a Sportradar subsidiary. In an understatement, Sportradar describes itself as “well-positioned at the intersection of the sports, media and betting industries.” It says it is dedicated to “redefining the sports fan experience” as it “safeguards the sports themselves” through “advocacy for an integrity-driven environment.”

Sportradar is dedicated to making money, first and foremost, of course. That’s why it has forged relationships with 900 sports betting outfits, 150 sports leagues and 350 media clients globally and how it earned $17.5 million on $478 million in revenue last year. It is also a harbinger of the brave new world of sports, pumped out 24/7 on streaming services and mobile devices and shot through with statistics and ample betting opportunities.

But as sports and gambling continue to blur once-distinct boundaries, and owners and leagues jump into the fray, Sportradar has history in mind, too. Gambling, even when it was underground, often collided with athletics, leading to occasional cheating and corruption and sucking some fans into compulsive wagering. So Sportradar feels compelled to reassure observers that is committed to “safeguards” and “integrity.”

That’s the same argument, essentially, that owners and leagues make for their deepening ties to gambling. Cuban, owner of the Dallas Mavericks, Leonsis, owner of the Washington Wizards, and Jordan, owner of the Charlotte Hornets, can make the argument that sports gambling is inevitable, that transparent and ubiquitous data allow owners and fans and gamblers to grow more sophisticated and that help can be found should betting become destructive for gamblers or society. Legalized sports wagering and easy access also make Cuban, Leonsis and Jordan’s franchises more valuable.

Call me old-fashioned, but there’s still a lot here that makes me squeamish, particularly because the U.S. only began tethering sports betting to the rocket fuel of digital platforms and ubiquitous legalization three years ago. History may not prove to be much of a guide to how this will evolve and what it might unleash.

Jordan himself, one of the sporting world’s greatest and most inspiring athletes, is a cautionary tale. He actively gambled while setting records for the Chicago Bulls, including playing blackjack in Atlantic City the night before a playoff game, though he said in a recent documentary that he never bet on his own team. He was such a frenetic wagerer that he once wound up owing a $57,000 gambling debt to a convicted cocaine trafficker and $108,000 to a murdered bail bondsman. It was seedy stuff, Jordan eventually sailed past it, and now he owns a basketball team and cuts deals with gambling companies. He recently took on a formal advisory role at Sportradar and increased his investment in the company. Last year, he became a special adviser to DraftKings.

Leonsis is also all in. He opened a 20,000-square-foot sportsbook last spring inside the Capital One Arena in Washington, where his team plays. He leases it to a major bookmaking company that runs it. “When you go into it, it looks and feels like what sports’ future should look and feel like: lots of data, lots of comfortable settings, lots of televisions, lots of ways to learn about gaming,” he told the Washington Post.

I have a tip for you. Whenever somebody substitutes the word “gaming” for “gambling,” pay attention. Casino trade groups first deployed that strategy decades ago to make their industry’s national expansion feel warmer and fuzzier to skeptics. But sports betting, craps, roulette, blackjack and the like aren’t checkers or hopscotch. Leonsis, who spent an early part of his career as a marketer before making a fortune at America Online, understands this. Legalized gambling is also good for the fortunes of his holding company, Monumental Sports & Entertainment, which, in addition to the Wizards, owns the Washington Capitals hockey franchise and other sports teams.

Cuban, who is candid about the inevitability of sports gambling and the virtues of making it above board, is also comfortable with its proximity. Until last week, he had a professional gambler, Haralabos “Bob” Voulgaris, working as the Mavericks’s “director of quantitative research” and reportedly running the team’s front office. Voulgaris left the Mavericks on Sept. 23, after, he says, his contract expired.

Cuban, a one-time gambling buddy of Jordan, has also had lots of foresight. In 2004, he posted on his blog that he was contemplating starting a “gambling hedge fund” that made wagers instead of investing in the stock market. He noted all of the opportunities that awaited given how much data he could corral. “It’s an idea whose time has come,” he wrote.

Mixing sports teams, media, gambling and data mining isn’t a “gambling hedge fund,” of course, but Cuban and the other investors and operators at Sportradar are trying to build the next best thing. And we should pay attention.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Timothy L. O'Brien is a senior columnist for Bloomberg Opinion.

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