Yahoo Sports Punches Its Sports Betting Ticket With BetMGM Deal

With the announcement of an exclusive deal with BetMGM, Yahoo Sports has officially jumped into the sports betting pool.

According to a Yahoo Sports news article, the BetMGM partnership will “power sports betting for Yahoo Sports and create collaborative content experiences and live events.”

What the Principles are Saying

“The historic partnership with Yahoo Sports and BetMGM will change the future of fandom, providing new ways for sports fans to go beyond engaging with content and interact through commerce,” Guru Gowrappan, CEO of Verizon Media said. “At Verizon Media we believe in building products that connect consumers to their passions and drive the deepest end-to-end value possible.”

“This partnership marks an important moment for BetMGM in the growing U.S. sports betting sector,” Jim Murren, Chairman, and CEO of MGM Resorts International added. “Integrating Yahoo’s leading fantasy sports operations and content with BetMGM’s world-class sports betting and interactive platform uniquely positions us to drive market share and large-scale adoption among sports fans.”

Comparing This Deal With the FOX Sports-TSG Deal

Yahoo is the second major media outlet to catch sports betting fever (and it’s a pretty safe bet that it won’t be the last). FOX Sports and The Stars Group joined forces to create FOX Bet in May.

However, the Yahoo-BetMGM tie-up is structured quite differently than the FOX Sports-TSG deal.

In addition to creating a Fox-branded sports betting site, FOX received percentage ownership of TSG, with options to increase its ownership down the road.

The Yahoo-MGM deal doesn’t appear to have the same level of corporate integration.

The Product Is Just Weeks Away

Customers won’t have to wait very long to see what the company has in store. The Yahoo sports betting product is expected to launch next month.

According to the press release, it will first launch on the main Yahoo Sports pages and app (not the fantasy pages and app) with a broader rollout to follow.

The release also mentions a focus on free-to-play options in states without legal sports betting industries.

What We Know About the MGM-Yahoo Deal

The agreement doesn’t seem to provide Yahoo with a branded sportsbook. Rather, Yahoo will act as an affiliate, sending traffic to BetMGM sportsbooks.

Precisely how that “affiliate” arrangement is structured is unclear.

“We don’t want a clunky, 200-steps-to-place-a-bet experience,” Gowrappan said. “It’s a much deeper partnership than just sending a lead and then forgetting. That’s why we’re so focused on making it as frictionless as possible.”

It’s unclear if that means Yahoo will receive a CPA deal (where Yahoo receives a predetermined amount of money for specific user actions) or if it will have a revenue-sharing agreement, or some other type of affiliate relationship. Gowrappan’s comments seem to rule out a CPA arrangement, and a standard revenue-sharing deal would likely be problematic with regulators.

I think rev share for a company that plans on sending significant traffic to a single partner would be viewed as an ownership workaround to avoid licensure and vetting.

— Steve Ruddock (@SteveRuddock) October 29, 2019

10-15% Market Share No Longer Out of Reach

In an investors call earlier this month, GVC (the company that supplies MGM with its online gaming platforms) said it has a six-month target of 10-15% market share in New Jersey for BetMGM.

The assertion was greeted with skepticism. And for a good reason, considering MGM has struggled to gain traction in new US sports betting markets. According to research firm Eilers & Krejcik Gaming, MGM’s market share in New Jersey is in the low single digits.

Of course, looking back, GVC was aware the Yahoo deal was in the works, so the lofty target doesn’t seem as out of reach.

The Yahoo deal will certainly help in terms of marketing and player acquisition, but the product is a critical component in the highly competitive US markets.

It’s probably not a coincidence that MGM recently rebranded and revamped its online sports betting platform. Coupled with the Yahoo sports betting deal, it appears MGM has hit the reset button on US sports betting. So, while MGM is starting over, it’s doing so from a position of strength.