So this is a big deal. FOX purchased a 5% stake in online gambling operator The Stars Group, which runs the sports betting app BetStars in New Jersey.

Rupert Murdoch’s company paid $236 million for the stake which will give them an option to purchase 50% of the company in 10 years.

The immediate implication is that FOX will be able to leverage the existing sports betting technologies of Stars to launch FOX Bet, which may immediately become the dominant online sports betting app. They will also offer a free product in markets where sports betting is not yet live to grow a customer base in them.

FOX becomes the first major US media platform to partner with a sports betting operator, this after Comcast-NBC had toyed with the idea of launching NBC Sports Bet. Members of at three-man team at Comcast – an exploratory group of sorts – tasked with evaluating the market for an NBC betting product recently left Comcast for Penn National Gaming, indicating that things may not be progressing as quickly as expected at Comcast. More on that later.

A big deal

FOX buying a stake in The Stars Group is such a big deal because the holy grail of sports-betting synergy is for rights holders to have their own sportsbooks, seamlessly weaving action in with coverage.

Everyone is trying to replicate the model pioneered by Sky Bet in Europe, where, hold your hats, things get incestuous.

The Stars Group owns Sky Betting and Gaming, the betting offshoot of Sky which operates Sky Bet.

Sky was partially owned by FOX, which had a 39% stake in the company before it was outbid by Comcast for controlling ownership last year. Now FOX acquires a stake in The Stars Group to launch the American equivalent of Sky Bet.

FOX Bet will be a monster out of the gate just because of the sheer brand recognition of FOX and all its sports broadcast rights, particularly NFL football.

FOX obviously has plans on how to incorporate FOX Bet:

“There’ll be certain places, like our FS1 show ‘Lock It In,’ where it’s going to be tightly integrated,” said Fox Sports CEO & Exec Producer Eric Shanks. “Probably on some of our radio shows that are on television, more tightly integrated. You will see integrations in our pregame shows, but sitting here today, just announcing this deal, we still have a lot of work to do to say exactly how all of that’s going to be.”

This means lines and odds shown directly before, during and after games. FanDuel Sportsbook recently introduced live streaming (tennis) into its app, allowing you to bet on sports live while watching the game. The obvious problem with that sort of thing for many sportsbooks is broadcast rights. But FOX already has them, for the most coveted sports around.

As part of the deal, BetStars agrees to spend a certain amount on advertising on FOX broadcasts.

 

PA market access

The deal will presumably give FOX Bet an in to sports betting in Pennsylvania. The Stars Group has a partnership with Mt. Airy Casino Resort, which might mean we’ll see FOX Bet in Pennsylvania sometime this year. Additionally, The Stars Group has a market access deal with Eldorado Resorts, which will give them access to 11 additional states.

FOX Bet is poised to dominate the market.

 

Big brand

Here’s an interesting points from Bloomberg’s coverage of the deal. This:

Shanks said research shows that customer trust of a brand influences their willingness to wager on its platform. Fox data, he said, shows 27 percent of Americans will have a propensity to bet with the company’s brand, which is more than double the percentage for fantasy brands like FanDuel and DraftKings, where Fox invested in 2015, and casino names.

Now, convenient and tenuous numbers aside, the point is that FOX has more brand recognition than DraftKings and FanDuel, the two dominant leaders in New Jersey sports betting.

This sort of thing can prove difficult for upstart, even promising upstart, sportsbooks, such as PointsBet, to compete with. Though they are one to watch out for.

 

Comcast out for now?

Besides their three-man team leaving the company, the president of NBC Sports regional networks, David  Preschlack, seemed non-committal at the Betting on Sports America Conference last month in New Jersey on the prospects of NBC becoming an operator. This alongside The Score founder John Levy, who was boasting about his company’s entry into the fray this fall in New Jersey (along with massive signage at the event).

 

A contender

In my estimation, FOX Bet is the first immediate threat to DraftKings and FanDuel early dominance in the market. The BetStars app, while not without some bugs and hiccups and, um, British-isms unfamiliar to American bettors, is a good, accessible experience. Throw in some modernity and FOX branding, and you have a serious contender for the leading sports betting app. Big deal here.