FOX Sports and major sports betting player The Stars Group on Wednesday jointly revealed plans to launch FOX Bet. In a media release FOX Sports and Stars are calling their alliance “the first-of-its kind national media and sports wagering partnership in the United States.”
For sports bettors in states currently without legal sports wagering markets, the deal means they can expect, sometime during the 2019 football season, to have access a nationwide free-to-play game, awarding cash prizes to players who correctly predict the outcome of sporting events.
In a growing number of states with legal sports wagering marketplaces, a second product will also be available under the FOX Bet umbrella. It will give customers in states with regulated betting the opportunity to place real money wagers on the outcome of a wide range of sporting events in accordance with the applicable laws and regulations.
The blockbuster deal is leaving industry insiders wondering if similar deals may now be coming in the near future.
Fox takes a stake in Stars
The companies say their alliance also includes a long-term commercial agreement through which FOX Sports will provide The Stars Group with an exclusive license to use certain FOX Sports trademarks. Stars Group will use FOX Sports trademarks to launch the service as part of a 25-year commercial license. Stars Group also gains and editorial integration rights on some FOX Sports broadcast media and digital assets, the company said.
The model here is @SkyBet, which Stars bought last year for $4.7 billion. Sky Bet is has heavy emphasis on tech, and grew quickly by utilizing the brand of a regional media giant.
— Eben Novy-Williams (@novy_williams) May 8, 2019
At 25 years, the FOX/Stars alliance represents a long-range commitment. Many of the similar deals and business arrangements carved out between stakeholders since PAPSA, the law the made sports betting illegal in the U.S. was overturned by the Supreme Court just a year ago, have generally been for a much shorter duration.
It remains to be seen how FOX’s major sports partners such as MLB and the NFL will react to the announcement. It’s likely sports wagering promotion will be more evident on the network’s smaller platforms such as FOX Sports 1 and Fox Sports 2 rather than on over-the-air telecasts. It is certainly likely that fringe sports on FOX Sports 1 and Fox Sports 2 hoping to attract more interest will welcome the chance to integrate wagering into their telecasts.
The Stars Group is Canadian based, worldwide online gambling operation with a major presence in the online poker world. The relationship with FOX Sports is expected achieve its long sought after goal of carving out a greater position in the US’s young and rapidly growing national sports betting marketplace.
Other Stars Group partnerships and efforts have made it an operator in New Jersey through Resorts casino, under its BetStars brand, as well as in Pennsylvania through the Mount Airy Casino Resort. Further in December 2018, the company struck a deal with the NBA, designating Stars as an “authorized gaming partner” of the league.
FOX and the Stars Group said that In addition to the commercial agreement of up to 25 years and associated product launches:
Fox Corporation will acquire 14,352,331 newly issued common shares in The Stars Group, representing 4.99% of The Stars Group’s issued and outstanding common shares, at a price of $16.4408 per share, the prevailing market price leading up to the commencement of exclusive negotiations. The Stars Group currently intends to use the aggregate net proceeds of approximately $236 million for general corporate purposes and to prepay outstanding indebtedness on its first lien term loans. The common shares issued to Fox Corporation are subject to certain transfer restrictions for two years, subject to customary exceptions.
Rafi Ashkenazi, Chief Executive Officer of The Stars Group said:
“We believe this strategic partnership uniquely positions us to build a leading betting business in the U.S., which represents one of the most exciting long-term growth opportunities for our company. 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.”
From Eric Shanks, Chief Executive Officer and Executive Producer of FOX Sports:
“FOX Sports is already synonymous with the best live sports events in the country and now we are expanding the way we immerse 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.”
Additional terms of the the commercial agreement include:
- FOX Sports will grant to The Stars Group an exclusive license for the use of certain FOX Sports trademarks for a range of immersive games and online sports wagering, and certain exclusive advertising and editorial integration rights on certain FOX Sports broadcast media and digital assets.
- FOX Sports will receive certain brand license, integration and affiliate fees.
- The Stars Group has agreed to a minimum annual advertising commitment on certain FOX media assets. Prior to the tenth anniversary of the commercial agreement, and subject to certain conditions and applicable gaming regulatory approvals, FOX Sports has the right acquire up to a 50% equity stake in The Stars Group’s U.S. business.