On Thursday, TSG held an analyst call to discuss Wednesday’s surprise announcement of the blockbuster 25-year Fox Bet deal, which will see the broadcaster take a nearly 5% stake in TSG and potentially a 50% stake in TSG’s US-facing betting business over the next decade, in exchange for granting TSG exclusive access to pitch betting opportunities to Fox Sports viewers.
The Fox Bet JV will be overseen by TSG’s chief corporate development officer Robin Chhabra, who called the Fox deal the “ideal springboard” into the expanding US betting market. TSG has also set up an advisory board that will include Ted Moss, former managing director of TSG’s SkyBet brand, and Grand Parade founder Andy Clerkson.
TSG views the Fox deal as a “large and cost-efficient” customer acquisition channel. Chhabra pegged the average Fox Sports viewer not as a ‘hardcore’ bettor but someone looking to “spice up” their viewing with a little action on the side.
While the partnership requires TSG to pay a variety of affiliate and licensing fees to Fox, TSG CEO Rafi Ashkenazi emphasized that there was no revenue-sharing component, which spares Fox the pain of having to apply for gaming licenses in the states where real-money betting is active.
TSG is also required to invest an undisclosed amount into marketing with Fox, but Ashkenazi said this amount was “quite below what we are planning to invest” in this endeavor. Chhabra added that there was some flexibility in these marketing spending requirements based on the number of US states that legalize betting (and how fast they do it), but echoed Ashkenazi in saying he was “very confident we will spend in excess” of the minimum guarantee.
The partnership involves both real-money and free-to-play (FTP) betting products, and Ashkenazi salivated at the potential for cross-selling real-money customers into TSG’s poker and casino products. Meanwhile, the FTP product would help build a “highly qualified database” of future sports bettors in US states where real-money wagering isn’t yet legal.
Ashkenazi likened this FTP acquisition model to the one taken by TSG’s flagship online poker brand PokerStars, although the more modern reference would be to daily fantasy sports (DFS) operators such as DraftKings and FanDuel, which leveraged their brand awareness to (currently, anyway) dominate the US real-money sports betting market.
Given the success that DFS operators have enjoyed in the US betting market to date, one of the more head-scratching moments in the presentation accompanying TSG’s Thursday call was that Fox Sports had a brand awareness of nearly 80%, which TSG claimed was 50% higher than the leading DFS operator. More realistically, the slide also said that 27% of Fox Sports viewers would consider using it as a betting brand.
Sticking with the DFS subject, TSG said it was currently “reinforcing” a small Texas-based team – starting with the folks behind DFS operator Victiv, which TSG acquired in 2015 and rebranded as StarsDraft – that would work to localize TSG’s betting product for the US market.
Ashkenazi emphasized the media integration lessons his company had gleaned from its acquisition of UK-facing Sky Betting & Gaming, and claimed this media-centric model was a better path for the US market than that taken by some of TSG’s rivals, such as partnering with a major land-based casino operator (see GVC-MGM) or buying into the DFS business (see Paddy Power Betfair-Fanduel).
TSG has its own deals with land-based operators, including Resorts Casino Hotel in New Jersey, the Mount Airy property in Pennsylvania, and a major partnership with Eldorado Resorts that grants TSG access to an additional 13 states. Ashkenazi said TSG was in “advanced discussions” to expand into other US states and TSG hopes to eventually have a betting presence in as many as 40 states.