Super Group (NYSE: SGHC) may be inflating financial statements from a South African affiliate, potentially misleading investors, according to Spruce Point Capital Management, a money manager that specializes in bearish possibilities.

After conducting a forensic analysis of the online casino and sportsbook operator's financial records, Ben Axler's research firm found that the gaming company's 2025 Form 20-F submitted to the Securities and Exchange Commission (SEC) falsely claimed that Super Group owned 100% of Raging River Trading (Pty) Ltd.

What makes it material? According to Spruce Point, "we estimate that the subsidiary's 2025E EBITDA is roughly $287 million, or ~52% of SGHC's total 2025E earnings before interest, taxes, depreciation, and amortization (EBITDA)." Raging River has generated a very alluring 36.5% EBITDA margin, according to SGHC's financials. The extraordinarily strong economics of the subsidiary are fully reflected in SGHC's current financial reporting.

The short seller cites a letter from the Western Cape Gambling and Racing Board of South Africa in May 2024 stating that 10.71% of Raging River was to be transferred to a company called Betway Cares Foundation NPC. This means that Super Group controls 89.29% of that unit, not all of it.

Why Super Group Investors Care

Africa played a significant role in Super Group's 2025 performance as one of the top-performing iGaming/sports wagering stocks, even if the company has dropped 25% year to date.

In all of the nearly ten African markets it operates in, including South Africa, the company has a "podium" positioning in online casinos and/or sports betting. The continent is home to millions of younger potential bettors who, like their Western counterparts, are dependent on their mobile devices. Super Group operates in Europe and Canada as well.

The operator's strategy for Africa and its subsequent expansion there helped to justify its exit from the United States. About a year after announcing its intention to exit the US sports betting market, Super Group announced last year that it was discontinuing its US iGaming activities. If Spruce Point's claims are true, Super Group appears to be presenting a more positive image of its South African activities than is actually the case.

“If SGHC is improperly consolidating 100% of Raging River’s financial results rather than 89.29%, we estimate it may be overstating 2025E EBITDA by approximately $30.7 million which represents the 10.71% non-controlling (minority) interest,” observes the research firm. “This would represent a material misstatement that strikes at the heart of SGHC’s reported profitability and raises fundamental questions why the Company recently changed auditors and whether past material weaknesses of internal controls have been remediated as claimed.”

Spruce Point's Gaming Stock History

Some gaming investors are probably acquainted with Spruce Point because the company has published a number of pessimistic studies on industry participants, the most recent of which came before Super Group and was about DraftKings (NASDAQ: DKNG) being susceptible to disruption by prediction markets in October 2025.

Although there is disagreement over how much market share firms like Kalshi are stealing from operators like DraftKings—data suggests not much in states where DraftKings provides sports betting—that stock closed at $21.76 last Friday and traded at about $35 on the day the Spruce Point report was released.

Super Group has a history of "material weakness," according to Spruce Point, which also notes that the company switched auditors last year.The corporate structure of the Betway parent company is "complex," according to the research firm.

“We believe the level of complexity adds unique risks to the investment story such as overlooked movements in ownership of these entities,” said the short seller.