FuboTV shares are riding high again after the emerging company announced it is acquiring sports betting startup Vigtory, planning to use it to launch a full-fledged sportsbook later this year, Sportico sister publication Deadline reports.
Terms were not disclosed for the deal, which is expected to close in the first quarter. It positions Fubo, which was founded in 2015 as an internet-delivered pay-TV operator, as more of a hybrid company. While far smaller than DraftKings and FanDuel in the sports betting space and Hulu + Live TV, YouTube and Sling TV on the virtual MVPD front, the acquisition advances a strategy of blending the two businesses.
Shares in Fubo, which have been on a roller-coaster ride in recent weeks, shot up on news of the deal and surged to the closing bell to finish at $36.47, up 34%. The stock has more than tripled since its IPO last fall, prompting debate in investor circles about its valuation, with bulls seeing it as a proxy for the streaming revolution and bears viewing it as overextended.
Co-founder and CEO David Gandler, in an online appearance at a Needham & Co. conference today, said the Vigtory acquisition will create multiple revenue lines, making FuboTV less vulnerable to cord-cutting. Once known as “skinny bundles,” internet-delivered TV packages have seen mixed results, with AT&T and Sony shutting down their offerings and leading players YouTube and Hulu hiking prices significantly.
“The sports betting side allows us to increase the funnel,” Gandler said, referring to the opportunity to acquire new customers. “We’re going to be targeting customers with our free-to-play app, which adds more people to the funnel who care about sports. … We think it’s going to increase engagement and retention, which we think is going to increase monetization.”
The free-to-play app is powered by animation software from Balto Sports, which Fubo acquired in December. Over time, Gandler’s vision in mounting the sportsbook is to enable on-screen betting, so that viewers will be able to wager as they watch games, though that will likely take years to come to fruition. Many technological and regulatory hurdles will have to be cleared, and in a market estimated to be worth more than $150 billion by 2024, a host of other companies are driving toward similar goals. In Gandler’s view, “it’s not a zero-sum game,” meaning Fubo could co-exist with many other rivals.
A Supreme Court ruling in 2018 legalizing betting in New Jersey has sparked a wave of investment by media and tech firms looking to cash in on what is expected to soon be coast-to-coast wagering.
Fubo launched initially as a soccer-focused TV package before broadening out into what it calls a “sports-first” orientation. But some skeptics have noted some gaps in its sports offerings – it parted ways with WarnerMedia networks, meaning no NBA games on TNT or NCAA basketball on TBS. It also does not currently carry the Ballys regional sports networks run by a consortium led by Sinclair Broadcast Group.
Vigtory was founded in 2019 by Sam Rattner and backed by SeventySix Capital. Rattner previously founded Engine Sports, a back-testing engine allowing retail sports bettors the ability to build algorithmic betting strategies within an interactive experience.
Scott Butera, who was president of interactive gaming at MGM Resorts International and played a key role in launching BetMGM, joined Vigtory as co-CEO in 2020. Prior to MGM, Butera was commissioner of the Arena Football League and held management posts at numerous casinos and gaming concerns.
Plans call for Butera and Rattner to join FuboTV’s gaming division as president and COO, respectively.