Amid Great Depression-style bank runs and the recent collapses of Silicon Valley Bank (NYSE: SVB) and SVB Financial (NYSE: SIVB), among other financial institutions, sports bettors can rest assured that their deposits with gaming companies are likely safe.

MVB Financial (NASDAQ: MVBF), the West Virginia-based community bank that’s the dominant third-party financial institution for internet casino and online sportsbook operators, saw its shares slump more than 15% for the week ending March 13 as some banks with cryptocurrency exposure and risky deposit bases were forced to the brink. However, MVB is arguably a baby being thrown out with the bathwater as some market participants fret about a repeat of a 2008-style financial crisis.

In comments made to Casino.org earlier today, KBW analyst Catherine Mealor said she doesn’t see ripple effects from other banks impacting MVB, noting that just $100 million of MVB’s $2.6 billion in deposits are in crypto while adding that 94% of MVB deposits are insured compared with a 90% or more uninsured rate at institutions such as SVB Financial and Signature Bank of New York, the latter of which was taken over by New York regulators last weekend.

Short Sellers Ignoring MVB Financial for Now

In recent days, encouraged by the calamity at Silicon Valley Bank, bearish traders sank their teeth into a slew of financial services stocks, but they ignored MVB Financial.

S3 Partners Director Matthew Unterman told Casino.org that short interest in the preferred bank of sportsbooks is currently just 190,000 shares, or 1.69% of the shares outstanding. In notional dollar terms, that’s a mere $4.07 million. MVB fundamentals indicate shorts might do well to avoid the name.

MVBF is well positioned for substantial profitability improvement over the course of 2023 (1.1% return on assets in sight for 1Q23, up from 0.47% in ‘22) as the company benefits from deeper penetration in the gaming industry (deposits/payments), growth in its card acquiring business, fees and deposits from its partnership with Credit Karma,” wrote KBW’s Mealor in a note to clients.

She adds that National Insurance Board (NIB) deposits — the bulk of MVB’s deposit base — are “more valuable than ever.” That protection is important to the bank’s gaming clients and the bettors making deposits with those firms. The benefit for MVB is that it doesn’t have to pay interest on that capital, making its relationships with iGaming and sportsbook operators compelling from a margin perspective.

Sports Betting Looking Advantageous for MVB

At a time when crypto exposure is harming some banks and Silicon Valley Bank’s decision to buy bonds in 2021 prior to the start of the Federal Reserve’s interest rate tightening regime now looks regrettable, MVB’s gaming ties could be seen as attractive by analysts and investors.

“We believe that MVBFs gaming vertical has substantial opportunity for deposit and fee growth as more states get approval for online betting and the card acquiring business has also seen some momentum with new accounts coming online and increased penetration from current relationships (Fiserv and World Pay),” noted Mealor.

She adds that while the bank’s gaming deposit base is highly concentrated with DraftKings and FanDuel commanding the bulk of those deposits, MVB defrays some of that risk by pushing some of that capital off its balance sheet. Additionally, the average balance is around $150,000 — well within the parameters of FDIC protection.

Casino.org reached out to MVB Financial and DraftKings for comment. Neither company replied prior to publication of this article.

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