In a dramatic statement by the two entertainment giants Fox Sports and The Stars Group (TSG), it was announced they have joined forces to launch a new sports betting service in the United States. This makes Fox Sports the first large media company to place its brand on a sports betting platform.
The two groups plan on launching a new online sports betting service, Fox Bet, to debut later this year. Fox invested over $230 million in TSG as part of the partnership’s terms.
The deal is expected to change how sports fans consume sports media and gaming entertainment in the United States, according to the Fox Sports CEO Eric Shanks in a conference call yesterday.
The Stars Group saw its share price jump 20% after the news broke while the Fox Corporation saw a more conservative 6% rise.
Key Terms of Fox-TSG Deal:
- This is a 25-year agreement that gives The Stars Group the exclusive use of some of Fox Sports’ trademarks in the United States for sports betting.
- Fox Sports will acquire a 4.99% stake in The Stars Group for a price tag of $236 million.
- Two separate products will launch in Fall 2019 – a free-to-play product and legal sports betting in states where this is allowed.
- The Stars Group will gain exclusive advertising and other rights on select Fox Sports media and digital assets.
- Fox has the right to become a 50-50 joint venture partner with TSG’s US operations within a decade.
- The current chief corporate development officer for TSG, Robin Chhabra will become CEO of the new Fox Bet.
Executives Talk About Fox Bet Deal
Eric Shanks, CEO and Executive Producer of Fox Sports said the group is already synonymous with what he terms “the best live sports events in the country”. He said the group is expanding the way it immerses 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,” he said.
The CEO of The Stars Group, which operates the iconic online poker room Poker Stars, said he believes the strategic partnership with Fox will uniquely position TSG to build a leading betting business in the United States. He added that this is one of the most exciting long-term growth opportunities for the company.
Two Sports Betting Products This Year
Players can expect to see the launch of two sports betting products this fall.
The first is a free-to-play game that will award cash prizes to those who predict the outcome of selected sports games and events, in the form of an app. This is considered a friendly way to introduce US sports fans to the world of sports betting, and is similar to those that exist for professional sports leagues such as the NBA.
The second product focuses on states where sports betting is regulated and will give players the chance to place real-money wagers on a selection of sports. This product will rival the products by existing companies such as FanDuel and DraftKings.
Right now, sports gambling is legal and regulated in eight states:
A further fifteen states have legislation in the works that could see their industries regulated by the end of this year and a further 30 by the end of 2020. These are the estimates of research and analytics company, The Action Network.
Fox Bet and the US Sports Betting Landscape
Right now, FanDuel and DraftKings monopolize around 80% of New Jersey’s sports betting industry. The Stars Group’s own sports betting platform BetStars operates in the Garden State under the BetStarsnj.com brand but hasn’t managed to capture any noteworthy part of the market and is clearly lagging behind the other two.
Many in the industry predict TSG will retire the BetStars brand across the United States and allow Fox Bet to take its place.
It also raises several short-term scenarios for the deployment of the Fox Bet brand. This includes its entry into the Pennsylvania sports betting industry through BetStars’ deal with Mount Airy Casino Resort and in West Virginia through BetStars’ deal with Eldorado Resorts (which owns the Mountaineer Casino). Other possibilities are Indiana (again through the Eldorado-operated Tropicana Evansville). Depending on how legal aspects play out, Fox Bet could also enter Ohio, Louisiana and Colorado where Eldorado has a presence.
It is safe to say that given the potential of operating in multiple states – and the financial rewards that come with doing so – Fox Sports will be investing heavily in lobbying efforts to see mobile betting legalized in other states.
Sports Media Companies Will Follow
Fox has fired the opening shot in the battle for big-brand sports media companies to grab a portion of the multi-billion dollar US sports betting market. It will be no surprise to see other major brands follow suit.
Potential companies could be NBC Sports, which has already expressed some interest in the market by registering betting-related domains in its name, and CBS Sports which runs its SportsLine platform.
It may take a lot for ESPN to enter the foray because of parent company Disney’s tendency to keep the brand “clean and family-friendly” – something not quite synonymous with sports betting.
Deal Places PokerStars Firmly Back on the US Map
The deal between Fox and The Stars Group is a victory for PokerStars, the online poker room that once ruled the US online poker market. When the Department of Justice passed the Unlawful Internet Gambling Enforcement Act in 2006, many top online gambling sites opted to ban US customers from their platforms. PokerStars, however, chose to remain and became one of the most popular gambling sites in the US.
All this changed on April 15th, 2011, a day that would later become known as Black Friday, when the US Attorney’s Office seized the domain names of several online poker sites, including Poker Stars. The site was forced to ban US players and to eventually return funds that players had in their accounts.
While PokerStars runs a successful international brand, it has always looked to return to the US online gambling market. After rebranding from Amaya to The Stars Group, the parent company has done all that it can to enter the market through the legal front door.
PokerStars’ entry into the fledgling market of individual states has sometimes been seen as a threat and lawmakers have introduced “bad actor” clauses as conditions into online casino bills with Poker Stars in mind – essentially making it a condition that operators that have a bad history with US authorities should not be allowed to offer their products in the state. This has hampered the group’s return to the US and it is currently licensed in just two US states; namely New Jersey and Pennsylvania.
As an example of the difficulties that TSG had to obtain its New Jersey license, one only needs to read the state’s Division of Gaming Enforcement statement. The text highlights the dilemmas faced by authorities and shows how TSG just managed to squeak through.
“While the PokerStars entities operated in violation of the law between 2006 and 2011, a number of considerations – including the severe criminal and civil sanctions imposed by the federal government, the complete and irrevocable separation of the previous owners and almost all of the former executives, the acquisition of the assets by Amaya and their incorporation into a robust compliance and control environment, as well as significant changes in the Internet gaming market since 2011– lead to a finding of suitability,” wrote the DGE.
The new deal should put PokerStars back on the path to easier market access in the US.