SharpLink Gaming, operating in the volatile world of online sports betting and iGaming, has been steadily growing its revenue. But Wall Street seems hesitant. SharpLink's Q3 2023 earnings transcript reveals a potentially significant detail: a hidden growth engine within the company.

SharpLink's acquisitions, FourCubed and SportsHub Games Network, are key to this expansion. While FourCubed's affiliate marketing expertise is recognized, SportsHub's contribution, especially its fantasy sports assets, is overlooked. LeagueSafe, a fantasy sports league management platform owned by SportsHub, collected nearly $32 million in entry fees from over 56,000 private fantasy football leagues in the 2023-24 season.

This figure, a 22% increase from the previous season, indicates a robust and growing user base for LeagueSafe. The market views SharpLink as a sports betting solutions provider, but this substantial LeagueSafe revenue, generated from fantasy sports enthusiasts, could be a stepping stone to future growth in sports betting.

"Fantasy sports are a known precursor to sports betting engagement. LeagueSafe, with its expanding user base, offers SharpLink a direct pipeline to this highly engaged audience."

SharpLink's CEO, Rob Phythian, emphasizes the company's intent to "own fantasy sports assets that will provide us with a growing proprietary audience of sports fans whose passion for fantasy sports games and contest will fuel their conversion to legal sports bettors." This, combined with the impressive LeagueSafe figures, suggests a strategic roadmap.

Hypothetical Revenue Impact of LeagueSafe User Conversion

Let's hypothesize: if SharpLink converts even a fraction of LeagueSafe's users into sports bettors, the revenue impact could be substantial. A 5% conversion rate is over 2,800 new bettors. Considering the average revenue per user (ARPU) in sports betting, this could translate to millions in additional revenue.

Wall Street's valuation of SharpLink might be overlooking this potential. Analysts focusing on current sports betting solutions may miss the user acquisition engine that LeagueSafe represents. This potentially undervalued asset could be key to future growth.

As legal sports betting evolves, SharpLink's strategic use of fantasy sports could differentiate them. Whether Wall Street catches on remains to be seen, but the signs point to a potentially undervalued opportunity.

"Fun Fact: The Fantasy Sports & Gaming Association (FSGA) estimates that over 60 million people play fantasy sports in the US and Canada, highlighting the massive potential audience for companies like SharpLink."