Super Group Accused of Overstating Subsidiary Earnings

Super Group (NYSE: SGHC) is under the spotlight after a short-seller report claimed the iGaming and sportsbook operator may have overstated earnings from its South African subsidiary, Raging River. 

The allegations, made by money manager Spruce Point Capital Management, suggest investors could have been misled by the company’s financial statements.

The Ownership Issue 

Spruce Point says the subsidiary contributes roughly $287 million in 2025E EBITDA, around 52% of Super Group’s total projected EBITDA. 

“SGHC’s financials show that Raging River has produced a very attractive 36.5% EBITDA margin. SGHC’s financial reporting, as currently presented, captures 100% of the subsidiary’s extremely strong economics,” the firm said.

The problem, however, appears to come from ownership. According to the short-seller, Super Group’s SEC filing indicates it owns 100% of Raging River, but a May 2024 notice from South Africa’s Western Cape Gambling and Racing Board shows 10.71% was transferred to Betway Cares Foundation NPC. 

That means Super Group holds only 89.29%, not full ownership. If the company consolidated the full earnings, Spruce Point estimates EBITDA could be overstated by about $30.7 million, representing the minority interest.

The report also raised questions about why Super Group recently changed auditors and whether previously identified weaknesses in internal controls were properly addressed.

Super Group’s previous strategic decisions included leaving the US market due to failure to meet profitability goals in the long term. In 2024, CEO Neal Menashe explained that the sportsbook product there recorded a $21.7 million loss and a 13% revenue drop in May that year. 

Menashe said the firm planned to refocus capital and resources on markets with more sustainable growth potential, while chief financial officer Alinda Van Wyk noted exit-related restructuring costs could reach $30-40 million.

“The Level of Complexity Adds Unique Risks” 

Despite these challenges, the company continues to expand the Betway brand globally. Recently, Betway renewed its sponsorship with esports organizer BLAST, a deal that began in 2019 and leverages exclusive access to players at major events to promote the brand.

Spruce Point highlights a history of “material weakness,” a recent auditor change, and a “complex” corporate structure. “We believe the level of complexity adds unique risks to the investment story, such as overlooked movements in ownership of these entities,” the firm said.

The 2009-founded company under Ben Axler is known to gaming investors for bearish reports, including an October 2025 note warning that DraftKings could be affected by prediction markets. 

While such threats appear limited in states where DraftKings operates, its stock fell from around $35 when the report came out to $21.76 last Friday.