Streaming provider FuboTV will implement a strategic review of its betting arm, after determining that it could not operate the business alone in the current economic environment.
Fubo chief executive David Gandler said that the business was determined to ensure that its betting product – created when it acquired Vigtory – would be fully integrated with its streaming service. However, he said it could not achieve this by building its own technology.
As a result, it has initiated a strategic review of the wagering business.
“We continue to believe that an integrated wagering platform, offering both live video and a sportsbook, will result in the best viewing and gaming experience for consumers,” Gandler said. “However, as we have evaluated how best to scale these capabilities in today’s market, we have concluded that we will no longer pursue this opportunity on our own.
“Accordingly, our interactive wagering business is under strategic review. We are in internal and external discussions to determine the best path forward for Fubo’s gaming business and look forward to sharing more information.”
Gandler added that the market conditions during the initial plans to build the sportsbook no longer existed, and said that it is not much harder to make a large investment in new technology.
“We continue to believe that an integrated wagering platform, offering both live video and a sportsbook, will result in the best viewing and gaming experience for consumers,” he said. “However, we decided to enter the wagering business in early 2021 at a time when the business climate and efficient cost of capital provided the runway to develop new business clients with longer profitability time horizons.
“Now, with the recession and inflation hitting 40-year highs that no longer holds true.”
The sportsbook is currently live in Arizona and Iowa, and despite the review, two more launches are still in the pipeline. The business expects approval to launch in New Jersey in time for the 2022 NFL season, and added that it plans on launching in “an additional market” in the coming weeks.
“While our disciplined sportsbook progress continues, in light of a rapidly-evolving macro-economic environment, we believe it is important to be even more capital efficient than originally scoped,” the Fubo board said. “We are taking steps to de-risk our business and have made the decision to no longer go down the wagering path independently.
“As a result, we’re evaluating strategic opportunities for our wagering business.”
The business currently has market access in a number of other states, which Gandler said could be attractive to a business looking to partner with Fubo for access.
“We also have, if I’m not mistaken 10 or 11 market access licence deals in place,” Gandler said. “So we have some value to offer a partner who’s looking to quickly get into the business.
“And at the same time, not have to worry about spending a lot of money marketing to consumers given the number of customers we have as well as the number of trials that are coming in on a regular basis.”
During the second quarter of 2022, FuboTV reported negative revenue from sports betting, of $182,000, while the business as a whole reported $221.9m in revenue.
On the whole, the business made a loss of $116.3m, after expenses including a $10.7m impairment charge for goodwill related to the gaming business, which the business said was due to a drop in its share price over the period.
Earnings per share were negative $0.63, of which $0.06 was from the impairment charge and a further $0.05 due to operating expenses from the wagering business.