MVB Financial Dominates Online Betting Deposits

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Posted on: February 27, 2023, 02:45h. 

Last updated on: February 27, 2023, 03:07h.

MVB Financial (NASDAQ: MVBF), a sleepy West Virginia-based financial institution, is rapidly shedding its image as a small-town bank to become the premier option for the online gaming industry.

MVB Financial
MVB Financial CEO Larry Mazza. The bank is a leader in the online gaming space. (Image: The Business Journals)

With a market value of nearly $325 million, MVB Financial resides in micro-cap territory, but its increasingly dominant internet wagering footprint is getting the attention of Wall Street analysts. In a note to clients on Monday, JPMorgan analyst Steven Alexopoulos initiated coverage of the financial services stock with an “overweight” rating and a $35 price target, implying upside of 40% from the February 24 close. He’s just the fifth analyst to cover MVB.

Combining a strong management team with an intense focus on serving underserved niche markets with significant growth prospects, MVB has transformed its deposit franchise,” Alexopoulos wrote in his report.

The analyst added MVB Financial is transitioning from a small regional bank to “the Silicon Valley Bank” for the internet gaming space. Prior to the tech boom in the 1990s, Silicon Valley Bank was a mostly anonymous bank known only to depositors in Northern California. Today, its parent company, SIVB Financial (NASDAQ: SIVB), has a market value of $17.10 billion.

MVB Financial Has Strong Gaming Ties

While West Virginia is home to land-based casinos and allows internet casinos and mobile sports wagering, MVB Financial’s opportunity set extends well beyond its home state.

CEO Larry Mazza is a co-owner of ProFootballTalk, which provides content to NBC Sports. NBC Sports has established relationships with major sportsbook operators. Mazza’s ties to ProFootballTalk could be one reason MVB already commands 85% of the market for banking in the regulated online betting industry. At the very least, that relationship doesn’t hurt the bank’s case when it comes to earning business from gaming companies.

Currently, MVB has about $900 million of deposits on its book from customers of sportsbook operators such as DraftKings and FanDuel. That’s nearly a third of the bank’s overall deposits, and the benefit of deposits from bettors is that MVB doesn’t have to pay interest on that capital — a significant advantage at a time when interest rates are high.

Roughly half of MVB’s current deposits don’t require the bank to pay interest, up from just 10% six years ago, according to the financial services institution.

MVB Financial First Mover Advantage

While rivals slept on catering to regulated sportsbooks, MVB capitalized on that opportunity, which could pay long-term dividends for the bank and its investors.

“Just as Silicon Valley Bank is the hub that connects the players in the innovation economy, we see MVB establishing a first mover position with players across the online gaming industry including the operators, technology providers, alternative online gambling providers, as well as media partners,” noted JPMorgan’s Alexopoulos.

The analyst lauded MVB’s focus on underserved segments, adding that its first-mover advantage in online gaming presents it with a “‘blue ocean’ opportunity to become the bank of choice for online sports betting and online gaming operators.”


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