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For over six months now, global poker and gambling behemoth, The Stars Group (TSG) had been on the hunt for a media partner in the U.S. as part of its plans for expanding its sports betting business in the country. In the first-of-its-kind partnership between a major broadcast network and a licensed gambling operator, TSG which is parent company of PokerStars has now entered a long-term, $236 Million commercial agreement with FOX Sports for joining the regulated online sports betting market in the U.S.
Making the announcement on Wednesday, TSG divulged that the sports betting partnership will run under the banner of ‘Fox Bet.’
Rafi Ashkenazi, Chief Executive Officer of The Stars Group, said, “We believe this strategic partnership uniquely positions us to build a leading betting business in the US, which represents one of the most exciting long-term growth opportunities for our company. Leveraging our proven media partnership strategy with Sky Sports in the UK, we are excited to partner with FOX Sports to integrate wagering into sports media and drive customer acquisition and retention in the U.S.”
FOX Sports is a subsidiary of the Fox Corporation and TSG – FOX Sports will offer both free-to-play (FTP) and real-money products.
To start, they will launch two products between September to November this year. One of them will be an FTP game offering cash prizes to players who correctly predict the outcome of sports games.
The second will be called FOX Bet and will give residents of U.S. states where sports betting is legal, the opportunity to place real money wagers on the outcome of a wide range of sporting events.
Eric Shanks, Chief Executive Officer and Executive Producer of FOX Sports commenting on this new collaboration said: “FOX Sports is already synonymous with the best live sports events in the country and now we are expanding the way we immerse fans in the sports culture they love. Digital sports wagering represents a growing market opportunity that allows us to diversify our revenue streams, connect directly with consumers and expand the reach of the FOX Sports brand.”
The Partnership – What It Means for FOX Sports & TSG
The 25-year partnership is part of TSG’s strategy for facilitating sports betting in the U.S. For the company, FOX Sports which is a major U.S. sports network is an ideal platform partner for TSG to expand its customer base in the country.
Image Courtesy: Pluto TV
As part of the deal –
> Fox Corporation will acquire 14.3 Million newly issues shares of TSG amounting to 4.99% of the company’s total shares, at the rate of $16.44 per share. TSG will utilize the $236 Million net proceeds to repay outstanding debt and for corporate purposes.
> FOX Sports will grant to the TSG an exclusive license to use certain FOX Sports trademarks for a host of immersive games and online sports wagering.
> TSG will also get certain exclusive advertising and editorial integration rights on specific FOX Sports broadcast media and digital assets.
> FOX Sports will, in turn, receive brand license, affiliate, and integration fees from TSG, but there is no revenue-sharing component in the deal; hence FOX Sports will not be required to apply for gaming licenses in states where real-money betting is legal.
> TSG has also agreed to a minimum annual advertising commitment on certain FOX media assets.
> After 10 years of the agreement, and under certain conditions, FOX Sports can seek to acquire up to 50% equity stake in TSG’s U.S business.
TSG’s chief corporate development officer Robin Chhabra will oversee the Fox Bet JV. TSG is also reported to have established an advisory board that will feature former MD of TSG’s SkyBet brand, Ted Moss, and founder of Grand Parade, Andy Clerkson.
TSG – Streamlining Global Strategy For Sports Betting
2018 was the year when the TSG undertook acquisitions on an intensive scale, changing its own profile from a poker-first company into a diverse, multi-vertical gaming operator. Today, TSG’s bandwagon of gaming businesses can be broadly categorized as poker, gaming, and betting.
In poker, the company has worked hard to retain its market leader position in existing markets, while continuously exploring entry in new markets. As for gaming, it has regularly added content and offered higher-yield gaming options to its vast player base.
Sports betting was TSG’s smallest vertical till late 2017 when its in-house BetStars sportsbook brought in only 3.5% of the company`s total gaming revenue. Realizing the potential of online sports betting, TSG orchestrated a slew of acquisitions that have helped TSG become the top online sports betting operator in the UK, the third biggest operator in Australia and a significant player in Europe.
The gambling brands that TSG owns or licenses include PokerStars, PokerStars Casino, BetStars, Full Tilt, BetEasy, Sky Bet, Sky Vegas, Sky Casino, Sky Bingo, Sky Poker, and Oddschecker
For the U.S., TSG first struck a new revenue share deal with casino group Eldorado Resorts in November 2018. The agreement allowed TSG to market its brands and suite of online gambling products to each of the 11 U.S. states where Eldorado operates casinos. TSG is also licensed for internet gambling in New Jersey through its partnership with Resorts Casino Hotel in Atlantic City.
Now, by partnering with FOX Sports, the company has taken a step forward in its sports betting strategy for the U.S. Clearly, TSG is ready to take on rival brands like FanDuel and DraftsKings that currently dominate the U.S. sports betting market.