The media company Fox Corp., which is currently owned and controlled by the American-Australian media mogul Rupert Murdoch and his family, is purchasing a 4.99% stake in the gambling giant Stars Group Inc. So far, this has been the largest investment made by a media company in the newly-opened sports betting market in the US. It is to provide Fox with the chance to start a sports betting platform of its own.
As revealed by Rafi Ashkenazi, the Chief Executive Officer of Stars Group, the media company is set to buy an almost 5% stake in the gambling operator at the price of $236 million. Back in 2018, the Canadian gaming giant spread its presence in the global gambling market as a result of the acquisition of Sky Betting & Gaming worth $4.7 billion.
Boom! Fox Corp. Buys 4.99% of Stars Group, Starts Gambling Platform…
— Alfonso Straffon (@astraffon) May 8, 2019
As mentioned above, a new sports betting application called Fox Bet is set to be released later in 2019, in collaboration between the two companies. The sports wagering app is to offer two products. The first one of them will provide users with the chance to try to predict sports games’ results for free, while the other will give them the opportunity to wager real money bets in states where online betting has been legalized and is currently regulated.
As revealed by the CEO of Stars Group, as part of the purchase deal, the gaming operator will be granted an exclusive license allowing it to use some trademarks of Fox Sports for a period of up to 25 years. Apart from that, Stars Group has agreed to make an undisclosed investment in advertising on Fox Sports outlets on an annual basis.
Fox Corp. Trying to Capitalize Positions in US Sports Betting Market
The deal will also provide Fox Sports with the chance to obtain up to 50% of the US assets of Stars Group over the next 10 years. According to the Chief Executive Officer of Fox Sports, Eric Shanks, online casinos, domestic sports betting and poker could become a market worth about $9 billion in revenue by 2025.
But the deal would not be beneficial to Fox Corp. only. According to experts, what Stars Group seems to be doing is recreating its collaboration with Sky Bet in the US market. As mentioned above, Sky Betting & Gaming was purchased by the gambling giant in 2018.
Since the legalization of sports betting in the US in May 2018, an increasing number of media companies have been trying to find ways to take advantage of the new form of gambling allowed in the country. So far, that has been primarily content-related, but the deal with Stars Group has taken Fox Corp. a step further.
Fox Bet is aimed to make what Sky Bet succeeded to do when it comes to brand recognition and expanding its presence on the online gambling market of the UK, as it is still one of the few large-scale betting operators that do not have brick-and-mortar locations across the country. After the expected launch, the Fox bet application could be in a position to capitalize on the new markets, analysts have explained.
Moreover, the deal with Stars Group is expected to help Fox Corp. make its offering more diverse. According to Bloomberg analysts, for the time being, the media company derives more than 70% of its overall profit from Fox News. It has already made large investments in sports rights and is currently trying to boost its broadcast network’s growth.