Gambling-Sports Media Partnerships Yet to Pay Dividends

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July 1, 2020

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Having watched SkyBet (a subsidiary of The Stars Group) capture more U.K. market share than any sports betting brand (save William Hill and Flutter), U.S. gaming companies are moving to sign integrated partnerships with domestic sports media companies in an attempt to replicate that success. (See: The Stars Group/Fox Sports, MGM/Yahoo! Sports, William Hill/CBS Sports, Penn National/Barstool Sports) The belief is that a prominent media outlet can offer a nascent sports-betting platform a level of credibility and an audience that can drive their customer acquisition efforts. But the early returns on the approach have not been promising. FanDuel and DraftKings continue to dominate the legal sports betting landscape (see: N.J., Pa., Ind.) and as Dustin Gouker (Head of U.S. Content, Catena Media) pointed out, “none of the deals signed to date have manifested themselves in droves of new customers or money flowing through the sportsbooks.” While the U.S. market remains in its infancy (far too early to concede FanDuel and DraftKings the winners of this land grab), industry insiders—like Yaniv Sherman (head of commercial development, 888 Holdings)—have already concluded “SkyBet is the exception, not the rule,” and that the most sportsbook operator–media company partnerships are bound to be costly, fruitless endeavors.

Our Take: SkyBet is not a marriage between a gaming operator and media entity. Sky (a U.K. telecom giant) developed the sports betting brand internally. That’s a key differentiator, as being homegrown has ensured the sportsbook received “full buy-in” on the media side from the outset. As Sherman explained, “Partnerships between those worlds haven’t worked to date for a few reasons; one of which is buy-in. Media companies are typically appealing to a broader base and are more traditional in their approach.” As a result, they never truly embrace sports betting integration.

Another reason why SkyBet’s media-first approach is difficult to emulate stateside? “Sky has the rights to +/- 70% of all U.K. football games, so [nearly] every time a fan tunes in to a match they’re watching on the Sky Sports Network; with the SkyBet brand prominently featured on screen,” Sherman noted. David Van Egmond (CEO, Bettor Capital) explained that with the big four’s broadcast rights spread across so many domestic networks, “[partnerships between U.S. betting operators and media companies] fundamentally will not work in the same way.” Chris Dougan (Chief Communications Officer, Genius Sports Group) agreed, saying that “because Sky dominates the U.K. football market, there’s an affinity between the brand and sports fan [that does not exist in the U.S.]”

U.S. sportsbook brands also face state licensing challenges that SkyBet doesn’t. As it currently stands, fewer than 30 states have approved sports betting legislation, and no operator is conducting business in every state where it is permitted. That’s problematic considering the legacy television networks are often producing a single game broadcast for fans across all 50 states. It’s difficult (if not impossible) for domestic broadcasters to truly embrace/integrate a sports betting brand when such a large portion of the viewing audience is unable to participate.

The ease with which a U.K. sports bettor can sign-up for a new sports betting account is another factor. While English punters can register for a new account in a matter of moments, as Van Egmond said U.S. bettors “need to disclose their Social Security number and fill out 20 fields for I.D. verifications purposes [which ultimately dissuades the casual player from signing up for multiple accounts].” Perhaps that explains why “most U.S. sports bettors have just one or two apps right now—not 4 or more like they do in the U.K.”

If there is a sports betting operator positioned to successfully transform a media company’s audience into users of their product, many industry insiders believe it’s Penn National. That’s because as Van Egmond explained “Barstool’s demographics align with the demographics of the sports bettor (male, age 21–40).” In other words, it’s a “high relevant, highly engaged and large audience” for them to tap into. By contrast, the linear television outlets are drawing older viewers less likely to convert into sports betting customers. Gouker agreed, adding that “Barstool is more than just a media outlet. It’s a brand, and they’ve generally proven capable of driving action from their audience.”

The lack of success U.S. gaming operators have had to date with media partnerships is unlikely to dissuade others from taking a run at the model. Van Egmond predicted that both Sinclair and NBC (considered the two most attractive rights holders yet to align with a gaming company) would announce strategic relationships before the NFL season kicks off. He added that he would also “expect more partnerships between sports betting operators and digital sports media companies (think: The Athletic, Wave.TV), as operators search for effective and efficient customer acquisitions in a competitive spending environment.”