Fox Sports and The Stars Group dropped a bombshell on the US sports betting market on Wednesday. The two groups are partnering to launch a new online sports betting product, Fox Bet.
If the “new” product bears a resemblance to BetStars NJ, don’t be surprised though.
Stars plans to ditch the BetStars brand in New Jersey. Instead, the NJ online betting site will bear the Fox brand in its name. Officials from TSG all but confirmed the change during an investor call on Thursday.
Fox Bet latest media company sports betting endeavor
Fox Sports is the latest in a list of media companies getting into the sports betting space. It is arguably the biggest thus far, too.
Fox is getting directly involved in the betting game, including a 4.99% equity stake in The Stars Group. The deal will produce two different versions of the Fox Bet product.
The first version is a free-to-play product that allows fans to try and predict the winners of various games. The players with the highest success rate will win cash and prizes.
The second version is exclusively for states with regulated online sports betting, such as New Jersey. Presumably, TSG will offer a similar app in Pennsylvania through its partnership with Mount Airy Casino.
In New Jersey, the app will continue to nest on the same site as PokerStars. That means it will share a wallet just like it does now. The only visible change will be its name.
Stars trying to replicate Sky Bet’s success in Europe
PokerStars may be a big name in the US, but BetStars was never a brand that caught on in US markets. Ditto Sky Bet, even though it is one of the biggest sports betting brands in Europe.
In fact, working with Fox is a play straight out of the Sky playbook.
In 2006, Sky Bet was absorbed by 365 Media, which resulted in the current suite of Sky gambling and media products in the UK. After the success of the sportsbook, the company branched into other forms of online gambling as well.
The hope is leveraging the hugely recognizable Fox brand will improve TSG’s US position.
It is difficult to tell exactly how well BetStars NJ has performed thus far, as it shares a license with DraftKings and Resorts Sportsbook. And the NJ Division of Gaming Enforcement reports sports betting revenue per license, not per skin.
Most would agree it is one of the smaller brands though, lagging behind the likes of FanDuel Sportsbook and DraftKings.
Rafi Ashkenazi, the CEO of The Stars Group, even alluded to Sky in his statement about the announcement:
“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.”
Things could be very lucrative for Fox as well if this partnership succeeds. Fox has until the 10th anniversary of the deal to purchase up to 50% of the equity in TSG’s US operation.
Fox is not sweating over the Wire Act
While many in the gambling world are nervous the new Wire Act opinion will derail gambling expansion, Fox seems to be unconcerned.
Such a major media company getting directly involved in betting is certainly going to bring attention to the issue. Chris Grove, the managing director of Eilers & Krejcik, elaborated on Twitter:
This is arguably the big story here. Media companies (Fox and Sinclair now, Comcast + more to come) now lining up in direct opposition to Adelson's mission of killing online betting. https://t.co/k12m8eNChL
— Chris Grove (@OPReport) May 8, 2019
With both state lotteries and now media conglomerates invested in seeing the Department of Justice walk back its new opinion, the chances online gambling prevails certainly seem higher.
That kind of pressure on the DOJ could be very persuasive, more than that of Sheldon Adelson.
In the short term, it will be interesting to see how much the Fox brand can influence the US sports betting market, both in a developed market like New Jersey and in the rapidly growing list of states with legal sports betting.