Recent high-profile deals have shown a growing appetite for partnerships between sports media giants and sportsbook operators in the US. But considering the fragmented regulatory landscape in the US, not to mention the checkered history of media brands into betting, can such offerings succeed?
Since the Supreme Court struck down the Professional and Amateur Sports Protection Act in May 2018, around 17 US jurisdictions have legalized sports betting in some form. The legislative roll-out has occurred at a much faster rate than that of igaming in the wake of the Department of Justice’s 2011 declaration that the Wire Act only applied to sports betting.
In little more than a year, the unacceptable has quickly become socially acceptable. The US is in the throes of a “cultural revolution” in terms of attitudes to sports betting, Benjie Cherniak of SG Digital’s Don Best Sports told iGB North America. This is evidenced by the fact that the professional sports leagues, which previously were vehemently against legalization, are now in the market for gaming partners. Lest we forget, the leagues secured an injunction against New Jersey’s plans to regulate wagering, starting the process that culminated in last May’s Supreme Court verdict.
Considering sports betting’s most vocal opponents have quickly moved to accept—and profit from—the new reality, the speed at which the vertical has been legitimized makes it natural for sports media brands to move into the space. The opportunity, first and foremost, is for media giants to benefit from operators with advertising budgets to burn. But the deals between The Stars Group and Fox Sports, and subsequently Caesars Entertainment and ESPN, show a desire for deeper connections with the sports betting industry. To see how these deals could work, it’s worth looking at the history of similar partnerships in Europe.
PRIME EXAMPLE
The best-case scenario is Sky Betting & Gaming, which started life as an offshoot of the UK-facing media brand, before being acquired by CVC Capital Partners in an £800m ($1bn) deal in 2015, then The Stars Group in a $4.7bn deal in 2018.
However, it remains an anomaly in this space; media brands that move into realmoney wagering have tended to either struggle—or fail miserably. There was News International’s illfated partnership with Tabcorp, Sun Bets, and The Guardian’s GoWager, which launched to huge opposition from the newspaper’s audience before disappearing without a trace. In Italy, RCSMediaGroup partnered Playtech to roll out a betting and gaming offering for its Gazzetta dello Sport, the country’s most widely read daily newspaper. The offering was subsequently sold to Kenyan operator SportPesa.
Golden Nugget general manager of online gaming Thomas Winter says these failures come down to two key reasons. “One, it’s not their core business. If ‘controlling’ an audience was enough to be successful, then the likes of Facebook and Google would be market leaders in pretty much all digital businesses you can think of. “Two, the media companies’ core objective is to maximize their advertising revenues, which means they will lose a lot if they take advertising dollars from only one operator. Taking a 5% equity in an operator in exchange for preferred pricing or better, in-content exposure of the brand won’t move the needle for the big media companies, nor for the partner-operator.”
What helped Sky achieve such success was not advertising revenue but rather a captive audience at the time of its move into betting. Robin Chhabra, CEO of Fox Bet, the joint venture between The Stars Group and Fox Sports, says that 60% of Sky Bet’s player base are loyal and don’t bet anywhere else. “That’s a really significant number which taps into a customer base that wouldn’t ordinarily see themselves as gamblers,” he explains. “They are people that were always going to watch a game, but are having a bet to gamify their viewing.”
By encouraging those who would not consider themselves gamblers to have a bet, operators can tap into the casual betting market. These players spend less, but spend regularly, and are considered particularly loyal. In the US there’s the added bonus that many of these players won’t need much convincing—many will have been ready to bet for years but been frustrated by the lack of available options to play legally. The success of DFS in the US is proof that the audience is out there, and the potential rewards are huge.
John Levy, chief executive of Canadian sports media giant theScore, which is in the process of developing a Bet.Works-powered sportsbook that will launch later this year, estimates that 50% of its readers are sports bettors. “We have this great brand, huge engagement, a huge audience, and we always knew that if and when sports betting opened up it was natural for us to infuse that into our business,” he says.
BADGING EXERCISE
The problem is there is just one blueprint for success in this field. Sky Bet is very much an outlier, with its success down to a talented team as much as brand connections. Winter suggests that the way to make such partnerships work is by leveraging the media brand, looking to mirror its offering but with added gambling.
Sky Bet was “instrumental” in landing The Stars Group’s partnership with Fox Sports, Chhabra notes. “A number of media betting partnerships in the past have looked great in theory, but making them succeed is a different story,” he says. Chhabra says that “a simple badging exercise” should be avoided. “Consumers can see through that,” he explains. “If we’d slapped a Fox Sports logo on our site I don’t think that would succeed—it needed to be a collaboration at all levels.”
It’s for this reason that Fox Bet will be overseen by an advisory board, chaired by former Sky Bet managing director Ted Moss, as it looks to clone the DNA of that brand’s success. This will likely see a similar integration pursued, in markets where sports betting has been regulated. For example, Sky Bet odds have been integrated into Sky Sports’ fixture list, and there are navigation bar links to the betting offering.
“You’ll see contextually relevant betting information within a lot of the stories, so if there is a preview of the Champions League final, there will be some relevant information around the odds and goalscorer bets,” Chhabra explains. “Customers are telling us that even if they don’t bet, they find betting-related statistics add to the enjoyment of that article.” It’s a case of enhancing the core media product, rather than overwhelming or replacing it. And this is why Levy believes theScore can make a significant mark in sports betting. “We are always going to be a digital sports media company,” he says. “The difference is we’re now incorporating something new into it.” While theScore’s sportsbook will be separate to the core news app for legal reasons, Levy sees it as being an extension of that product, similar to Facebook and Facebook Messenger, rather than a new offering. “We’re not going to run ads in theScore for the betting product,” he says. “You’re going to be on theScore, or seeing articles or data, and at points at which you may want to make a bet, we’re going to make it viable to move seamlessly to the betting app. Then when you’re done, you can go back to theScore or stay there.”
Fox Bet will follow a similar approach, with Chhabra talking of “making betting part of the sports betting narrative,” and having it “woven into the fabric of the content.” Essentially the focus is sports first, betting second, he explains. For Caesars Entertainment, which has been named the official odds data supplier of ESPN, this will be the sole focus of the partnership in its current form.
By virtue of the deal, the operator’s CMO Chris Holdren says it aims to “create a space where the static data you see on display in a sportsbook comes to life through the compelling stories behind the numbers.” “Sports betting shouldn’t be limited to a sportsbook experience with traditional offerings—it can and should be a fun experience,” he explains. “Our partnership with ESPN allows us to reach fans on a variety of platforms in a more compelling manner by adding dimension to the people and stories behind the numbers.”
DIFFERING APPROACHES
These differing approaches to sports betting integration shows that willingness to integrate betting into sports content differs from company to company. For example, ESPN’s parent, the Walt Disney Company, has traditionally shied away from gambling. In 2017 it discontinued the deals to license Marvel’s characters for use in online slots after acquiring the comic book giant. In the run-up to the 2018 US elections, it spent some $20m in support of a measure to make it harder for operators to establish new casinos in Florida, home to its Disneyland theme park. While its acquisition of 21st Century Fox saw it acquire a stake in DraftKings, chief executive Robert Iger said in February that the company was unlikely to look for closer ties to the industry. “I don’t see the Walt Disney Company certainly in the near term getting involved in the business of gambling by facilitating gambling in any way,” Iger said, following the publication of the entertainment giant’s first quarter results. “I do think there is plenty of room—and ESPN has done some of this already and they may do more—to provide information and coverage of sports that, for instance, would be relevant to gambling and not be shy about it, basically being fairly overt about it. “But basically, getting into the business of gambling, I rather doubt it.”
However, Holdren suggest there may be scope to expand Caesars’ partnership with ESPN: “The passion people feel for their favorite sports teams is universal, and it isn’t going away, so this is just the beginning. “Both Caesars Entertainment and ESPN are excited to see how we can grow and expand our partnership as sports fans gain more access to legal sports betting across the US.”
However, it’s clear that even though acceptance is building, there still a desire to protect the brand. To strike a deal with a major media brand, Chhabra says it is a case of negotiating “soft points”— i.e. how the partnership will work in practice—rather than the hard transactional elements. “It’s a complex deal, unlike a typical M&A deal where you get some bankers and lawyers in a room to thrash something out,” he explains. “There were many operational components, so we began working with the producers and creatives to understand what they would be happy to do, and to ensure the integration was sympathetic to the content. “We had to make sure the talent was on board with the plan, and we had to engage directly with them. We also had to create a shared vision of how to integrate into the digital assets, to ensure betting could enhance these offerings.” He points out that for media companies, their brand is one of their most precious resources. The brand alone is worth “billions,” Chhabra says, and as such must be treated with the respect it deserves.
FRAGMENTED MARKET
Furthermore, US media companies pairing off with betting operators face a unique stumbling block. Despite the fast-paced regulatory developments, the majority of their core audience still cannot legally bet. Fox Bet will look to work around this with the launch of a free-to-play product, under the Fox Sports brand. This will be similar to Sky Sports’ Super Six predictions game, for which Sky Bet assists with the operation.
“The principal benefit of these games is to create engaging content for the media companies,” Chhabra says. However, he adds, this is not simply a “betting advertorial” as that would not aid Sky Sports’ brand objectives. But the potential benefits are clear: “Over half of the free-to-play player base say they are more likely to watch Soccer Saturday, and twothirds say playing the game increases their enjoyment of the program and actually more than two-thirds say that betting related content increases the probability of them betting.”
What could create an approximation of a federal market is the merger of Caesars Entertainment and Eldorado Resorts. The combination of the two operators creates a new gaming giant with 60 properties across 16 states. Each company has signed a number of market access deals, of which The Stars Group’s agreement with Eldorado Resorts is one.
Eldorado chief executive Tom Reeg has made it clear that it will aid the roll-out of the Fox Bet brand, telling investors: “We’re going to participate in the Fox Sports betting with our Stars Group deal. We really like what we’ve got there.” Even without this deal in place, the reach of Fox Sports is huge, and any operator would have to spend a huge amount on marketing to gain the level of brand awareness and legitimacy of a sports media brand.
“Fox Sports is available in 99% of US households,” Chhabra says. “They have more NFL and MLB rights than any other media company. Look at their NFL programming: there’s 17-20 million people tuning in every Sunday “Fox Bet will only be promoted in states where sports betting is legal, and while this is a handful today, everyone expects that to change in the coming years,” he continues. “The Fox Sport brand cuts through across all states, which gives us a big advantage when legal sports betting becomes more widespread.”
Levy argues that the scale of theScore’s audience across multiple states provides it with a ready-made captive audience for legal wagering. “Does it add layers of complication? Absolutely,” he says of the state-bystate regulatory model. “But we’re not concerned about things being on a state-by-state basis, as our users exist in every one of these states. “It’s consumed and loved by people in every state,” he explains. “If New York decides to legalize mobile, or not, that’s not going to change how people use our app. In the interim, we still have our branding out there, we still have an audience, so once a regulatory model is ready, we will be able to unleash what we have.
The state by state is probably of benefit to us.” For Caesars, it’s a case of building on an existing relationship with ESPN, first established around the World Series of Poker, and bringing additional value, such as a 55 million-strong Caesars Rewards loyalty program.
At no point is there a focus on acquiring new customers through heavy advertising. Instead, the focus appears to be to build on the media brand awareness. Levy argues that the current focus, on advertising heavily to build up a player base, is not sustainable. “You can’t keep buying your customers,” he says. “One of the interesting things we were asked is why are not going all-in and not just becoming an affiliate. We saw that in the poker days; we could have made a lot of short-term cash but long term we want to do more than that.”
He says theScore won’t be relying on spending $600 to buy a user, or investing hundreds on promotions. In Levy’s eyes, bonuses only serve to make players led by offers, and more likely to shift from brand to brand for the best promotion available. “Our approach is going to be completely different,” he says. “It’s going to be based on product rather than just trying to buy their loyalty.” Ultimately, there is a general consensus that sports media brands are only just starting to engage with legal wagering, and Holdren sees demand for such partnerships as being driven by both sides. “We ultimately need each other to expand our offerings and give fans access to compelling and exciting content,” he says. “As sports betting becomes more legally accessible, the interest around partnerships has only become more valuable.”
Whether or not any company can replicate Sky Betting and Gaming’s rampant success remains to be seen, but it’s clear that there is unlikely to be any shortage of attempts.