Most media companies looking to profit on legalized sports betting will “simply take ad money from sports bookmakers and/or develop programming aimed at sports gamblers” (think: ESPN’s Daily Wager announcement, B/R partnership with Caesars), some will pursue affiliate commerce (think: The Action Network), but few will book bets and issue payouts; theScore (OTC: TSCRF) intends on being one of them. Back in December, the company became the 1st North American based media outlet to announce plans to launch an online and/or mobile sportsbook. The company plans to introduce their sports betting product to bettors in New Jersey by mid-2019.
Howie Long-Short: The biggest reason that most media companies are unlikely to serve as sports betting operators is that the licensure process is both difficult (several states require a brick and mortar casino presence – including NJ) and costly; particularly when you consider that sports gaming is a low-margin business. theScore managed to secure market access – pending regulatory approval – through a partnership with Darby Development, the operator of Monmouth Park Racetrack.
TSCRF founder John Levy called the decision to become a sports betting operator the “natural next phase” for a company that has long embraced sports betting as part of its “DNA” (think: push notifications w/ the spread and O/U), but it seems unlikely that many U.S. outlets (TSCRF is Toronto-based) would want to book bets; they’ve historically taken a far more conservative approach to gambling out of concern for the games’ integrity.
Neal Pilson, the former President of CBS Sports (and the President of Pilson Communications), agreed pointing out that “broadcasters and telecasters, for years, have had to respond and refute accusations and speculation that they somehow control or influence the selection of participants and the outcome of the sports events they telecast. If the same companies got involved in betting and gambling on those events, it would only increase the hysteria that they will benefit in some fashion from the outcome or result; so, I think they will tread very cautiously here.” That’s certainly the way the industry has trended thus far – AT&T, Disney and WarnerMedia have all said they’re not interested in becoming bookmakers. It should be noted though, that Recode’s Peter Kafka reported hearing whispers that “one or two US-based companies [would look to directly enter the sports betting business] in the coming years.”
One inherent advantage that theScore enjoys over traditional media outlets is that they’re mobile native and maintain a database of over 4 million “highly-engaged” users – a combination that allows them to offer bettors the chance to bet on games while engaging with content in-app. An existing audience that “highly indexes as sports betting enthusiasts” should give theScore a viable chance to capture market share, but Dustin Gouker, Analyst for LegalSportsReport.com cautioned “having data insights and a database and turning it into a collective of regular sports bettors that create revenue, are obviously two different ballgames”; so, don’t expect them to “come in and immediately dominate.” Ultimately theScore’s ability to cash-in will be dictated by their consumer-facing interface. Dustin said, “we’ve seen in New Jersey that the companies with the better products have taken larger percentages of the market share.”
Fan Marino: theScore is going to be the first North American media company to enter the sports betting space, but the idea has been exercised in Europe; Sky, a UK based satellite business, was in control of its own sports betting business (Sky Betting & Gaming) for 15 years until it was spun off and acquired by The Stars Group for $4.7 billion in 2018. Dustin said that while Sky – not a digital first outlet – has been a success ($265 million in adjusted EBITDA in ’17), TSCRF should temper their expectations – at least relative to the market’s biggest players (think: William Hill) – as “sportsbook operators, gaming operators and online operators have done the best in the vast majority of the European markets.”
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