The Stars Group and FOX Sports announced a blockbuster deal that has sent shockwaves through the fledgling US sports betting market. And with that, FOX Bet has sprung into existence.
The deal was described by TSG CEO Rafi Ashkenazi as a “first of its kind, fully integrated national media partnership for sports wagering in the US,” during an investors call on Thursday morning.
The full details of the agreement can be found here, but in a nutshell:
- FOX Bet will offer two sports betting products: a real-money sports betting platform that will replace the BetStars brand in New Jersey and all other US markets, and a free-to-play app with cash prizes that will serve as a national advertising campaign and acquisition channel.
- The plan is to launch both products prior to the start of the upcoming NFL season.
- TSG will have exclusive use of the FOX brand and integrate sports betting content on FOX Sports TV and digital channels.
- FOX purchased a 4.99% stake in TSG, with the capability of increasing its ownership over time.
With the new partnership in place, FOX and TSG will now attempt to replicate the UK successes of Sky Betting & Gaming in the US through the newly created FOX Bet brand. It’s a model TSG brass knows very well–TSG acquired Sky Betting & Gaming last year for $4.7 billion.
The power of the FOX brand
During the investors call, TSG executives noted that FOX Sports’ suite of broadcast channels provide access to 99%+ of US homes. That access means FOX Sports (and by extension, FOX Bet) can reach as many as 100 million viewers on a weekend.
During a slide presentation, Robin Chhabra, the newly named CEO of FOX Bet, noted that FOX Sports possesses 80% brand awareness, with 27% of respondents saying they would strongly consider wagering on FOX Sports products.
Of the 10 comps presented, FOX Sports numbers were only bested by an unnamed media brand (likely ESPN), and were far superior to the two casino and DFS brands that were polled.
Having a strong brand in place, and near 100% market penetration for advertising is only one part of the Sky bet model.
Attracting the right type of sports betting customer
The second part is executing the strategy that propelled Sky Bet to its current place in the UK market.
The secret to Sky’s success is its pipeline to recreational bettors that are more interested in enjoyment than the ROI of their bets.
FOX Bet won’t disregard serious bettors, but it will follow the Sky Betting model that puts the focus on the more casual betting customer. A customer that isn’t as price sensitive and has proven to be very loyal to the Sky Bet brand.
“60% of Sky Bet’s customers are exclusive to Sky,” Chhabra told Legal Sports Report in an interview following the investors call on Thursday.
That’s an impressive number considering the maturity of the UK and European markets and the abundance of betting options customers have.
Two examples of Sky targeting recreational bettors are Sky Bet’s free-to-play app, and its popular “RequestABet” product. The free-play app will be a focal point of FOX Bet’s US acquisition strategy. Some version of RequestABet is also likely to be implemented.
The free-to-play acquisition channel
The backbone of Sky has been its free-to-play product.
“Free-to-play has been a huge driver of Sky Bet’s success,” Chhabra said. In the US, “free-to-play will be launched nationally, and integrated into TV shows,” and other FOX content channels across the nation.
Coupled with the reach of FOX Sports, the free-play app will allow FOX Bet to advertise in markets that have yet to legalize sports betting without running afoul of local gambling laws. In so doing, FOX Bet’s database will have a head start on some other operators.
That said, the key will be in the execution of the free-to-play model.
Simply offering a free-to-play sports betting app isn’t going to fill your database with customers that can be converted to real-money players.
The most likely scenario is large national contests with huge prizes, similar to the £100 million challenge BetStars ran during the World Cup.
Small wagers and bigger payoffs
RequestABet is a custom bet builder that allows bettors to customize parlay bets and request a price quote from Sky Bet.
Although bet builders are fairly common in mature sports betting markets, Sky was one of the pioneers of this format. It continues to be an integral part of their business model.
That model is simple: Attract customers who are interested in placing small wagers that provide larger returns. So instead of a customer placing a $5 wager on New England to win the Super Bowl (a bet that would net a meager $5 or so), they can create a custom parlay for the Super Bowl and turn that meaningless $5 into a more meaningful $50, or more.
And as Chhabra explained, because these bets have a higher hold percentage, “they’re not bets a seasoned bettor would be interested in.”
He went on to say that because the wagers are infinitesimal, a lot of Sky customers don’t even feel like they’re wagering.
“Sky Bet has a lot of customers that don’t consider themselves bettors… even though they’re wagering” he said. “The small bets provide them with some skin in the game, and a chance for larger payout.” That adds to their enjoyment as a viewer.
Rather than a transactional relationship between the sportsbook and the bettor, where the stress of a bet, and trying to “outsmart” the book takes precedence, Chhabra and Fox Bet want to elevate the viewing experience of the typical sports fan by giving them something extra to root for.