Fox Obtains $236m Stake in Stars Group to Launch Gambling Platform

  • Fox has bought a 4.99% stake in Bet Stars for $236m
  • It has the option of buying 50% of Bet Star’s US operations in the next decade
  • The two partners will launch Fox Bet before the end of 2019
  • This offering will have a free-to-play platform and a regular sportsbook
Fox has bought a 4.99% stake in Bet Stars, for $236m.
Fox has bought a 4.99% stake in Bet Stars, for $236m – the two parties will co-launch the Fox Bet sports betting platform.

Fox moves into sports betting

The Fox Corporation has bought a 4.99% stake in the Stars Group in a deal worth $236m. With this move, the company will launch its new sports betting platform. Fox also has the option to purchase half of Bet Stars’ US operations in 10 years if it wishes to do so.

The deal is certainly the largest investment a media company has made in the sports betting space to date, following the ending of the federal ban in May 2018. Media mogul Rupert Murdoch still owns Fox, along with members of his family.

The Stars Group is based in Toronto. It already has a presence in the US sports betting market – its Pokerstars brand operates a sportsbook in New Jersey. The company has experience in the sports betting space in Bet Stars, after it bought Sky Betting and Gaming in 2018 for $4.7bn.

Following the announcement of the deal, Stars Group’s share price rose by 11% at one stage during trading. The share price was already up almost 6% on the year to date.

The new Fox Bet platform

Both companies will be working together to launch Fox Bet at some stage in 2019. The platform will offer two different products, as part of their strategy to carve out a piece of this nascent market.

One of the two platforms will be completely free to play. People who successfully predict the results of different sporting events will be able to claim prizes. The other platform will be a fully encompassing sportsbook in those states where sports betting is legal. To date, that is 10 states.

The reason Fox and Stars Group are building a free-to-play platform is that it is a proven way to attract new customers and eventually convert them into paying customers.

Under the agreement, Stars Group will have exclusive access to some of the trademarks of Fox Sports for up to 25 years. It it is also committed to spend a certain amount of money annually on advertising on the various Fox Sports networks.

Bright future

The reason Fox Sports included a provision to buy 50% of the US operations of Bet Stars in a decade is due to the great potential that exists in the sports betting market. Experts believe that the online gambling market could hit $9bn annually in the US by 2025. This includes revenues from advertising, sponsorships and bets.

A media company is well positioned to create a coherent content strategy to help bring the Fox Bet platform onto the main stage, having a proven sportsbook operator in Bet Stars at their side.

Bet Stars will look to implement the successful strategy used by Sky Bet in the European sports betting market. That platform has been a success in Europe because of its emphasis on technology, as well as piggybacking off an established brand. Sky Bet is up there with the largest sports betting operators in the UK that do not have retail bookmaker stores. In 2018, it had the biggest active base of players.

Fox Bet likely will try a similar approach in the US market.

Abundance of funds

Fox has an abundance of funds with which to embark on new projects. Recently, it sold a large number of its entertainment assets for $71bn to the Walt Disney Company. It owns the most popular cable news channel in the US. Its sports networks have major rights to MLB, NFL and college football matches.

It can diversify their portfolio by getting involved in the sports betting sector. The Fox brand is a strong one and it will likely instantly drive swathes of customers to Fox Bet upon its launch. It is likely that there will be a sports betting element to their broadcasts of sporting events in order to drive cross-engagement. Fox already has a gambling-themed show on its FSI channel called “Lock It In.”