Digital fraud continues to plague the online gambling industry, with a recent report from TransUnion shedding light on the alarming increase in fraudulent activities targeting gambling sites. According to the study, over 10% of online gambling transactions in the United States were suspected to be fraudulent in 2023, marking a significant rise from previous years.

The report highlighted promotion abuse as the most common type of fraud within the gambling sector, indicating a trend where fraudsters exploit promotional offers and bonuses offered by online casinos and sports betting platforms.

Steve Yin, senior vice president and global head of fraud solutions at TransUnion, emphasized the shift in tactics among fraudsters, noting that instead of compromising existing accounts, they are now creating new accounts using synthetic identities. Synthetic identities, often assembled from data obtained through multiple data breaches, have become a lucrative tool for fraudsters, contributing to the surge in fraudulent activities.

The study also underscored the role of data breaches in fueling digital fraud, with the number of data breaches in the US increasing by 157% from 2020 to 2023. This escalation in data breaches has facilitated the creation of fraudulent accounts and synthetic identities, posing a significant threat to the integrity of online transactions.

On a global scale, the retail sector surpassed gaming, including online gambling and poker, in experiencing the highest suspected digital fraud rate in 2023, reaching 8.7%, marking a 21% year-over-year increase. Furthermore, the telecommunications industry witnessed a substantial 111% year-over-year surge in suspected digital fraud rate, rising to 4.5%.

Economic Shifts Alter Gambling Landscape

Furthermore, TransUnion’s research highlighted the impact of economic conditions on gambling behavior. Despite the overall resilience of the US economy, factors such as declining consumer liquidity and low consumer confidence have dampened gambling activity as per another TransUnion report released in January. 

In Q4 2023, decreased consumer liquidity led to a 10% decline in overall betting activity, with millennials being the exception, as 77% reported better-than-planned household finances. TransUnion’s report revealed that betting behavior is closely linked to available cash, with high-value bettors significantly influencing the market. 

While land-based channels saw higher participation rates, online platforms attracted more high-value bettors, particularly those depositing over $500 monthly. Despite a decrease in overall participation, strategies focusing on expanding across channels proved successful. 

TransUnion highlighted that understanding the financial signals distinguishing resilient from distressed players is crucial for operators aiming to attract high-value bettors.

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Financial services giant Macquarie has thrown its weight behind Genius Sports Limited, a sports betting data provider, with an optimistic Outperform rating. The move comes as the company positions itself at the forefront of the surging wave of NFL betting, driven by factors such as regulatory changes, the widespread embrace of sports betting, a shift towards in-game wagering, margin expansion, organic expansion, and strategic mergers and acquisitions.

Chad Beynon of Macquarie Predicts Genius Sports Shares to Double in One to Two Years

Macquarie analyst Chad Beynon outlined the catalysts contributing to Genius Sports’ potential growth, emphasizing its role as a vital contributor to sports fan engagement. Beynon envisions a doubling of the company’s shares over the next one to two years, attributing this growth to the significance of Genius Sports’ player statistics, artificial intelligence (AI) data, and its capacity to bring this data to life.

The report predicts a robust growth trajectory for the North American online sports betting market, estimating a Compound Annual Growth Rate (CAGR) of 24% through 2026, culminating in a gross gaming revenue of $22 billion. Macquarie suggests that Genius Sports is well-positioned to outpace this growth curve, driven by increased event utilization, the introduction of new products, and the expanding popularity of in-game betting.

A noteworthy factor working in favor of Genius Sports is the secure revenue stream guaranteed by the National Football League (NFL), projected to reach a substantial $126 billion from its media and TV deals. According to Beynon, Genius Sports now stands at the technological epicenter of the NFL’s rising tide, positioning itself as a crucial player in the sports betting landscape.

Genius Sports’ Stock Surges 2.27% After Macquarie Sets Ambitious $11 Price Target

To quantify their bullish outlook, Macquarie has set a price target of $11 on Genius Sports, representing a 77.4% upside from the current closing price of $6.20. This valuation is based on a 15X multiple of the 2026 EBITDA estimate and a free cash flow yield of 4.7%.

In response to Macquarie’s endorsement, Genius Sports experienced a 2.27% surge in premarket trading, reaching $6.30. This positive momentum comes on the heels of a year that has seen the company’s stock climb by an impressive 73.67%, further solidifying its position as one of the top-performing sports wagering equities.

Last month, Genius Sports reported a substantial 29.3% increase in Q3 revenue, reaching $101.7 million, leading to an upward revision of its full-year guidance. 

With growth across all segments, including a notable 34.1% rise in the betting technology division, the company’s year-to-date revenue has surged by 21.3%, totaling $285.8 million, prompting an adjusted full-year guidance of approximately $412.0 million in group revenue and $53.0 million in group adjusted EBITDA.

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