Fox Sports also receives the option to buy up to 50% of Stars Group by the year 2025.
Fox Corp bought 4.99% of Stars Group Inc., the parent company of PokerStars. The Fox Corp company, owned by Rupert Murdoch and family, announced the launch of Fox Bet as part of their investment in US sports betting.
Murdoch paid $236 million for the 5% stake in Stars Group, a Toronto based company.
Stars Group is a giant of the online gambling industry. Besides owning PokerStars, Stars Group runs a collection of famous gaming sites: Full Tilt Poker, Oddchecker, Sky Bet, Sky Vegas, Sky Casino, Sky Bingo, Sky Poker, BetStars, and BetEasy.
Stars Group last year bought Sky Betting & Gaming for $4.7 billion. In August 2014, Rational Group (Stars Group) itself sold for $4.9 billion. News of the investment caused Stars Group shares to rocket up 11% before regulators closed trading. Stars Group shares had increased 5.9% on the year before yesterday’s trading.
Stars Group and Fox Corp plan the launch of Fox Bet later this year. Fox Bet will be a joint venture of the two companies.
Fox Bet Gaming Site
The Fox Bet website will have two aspects. First, Fox Bet will host free-to-play games. Players can win prizes by picking the winners of sports contests, but won’t have to risk money on the gaming.
Second, Fox Bet will have real money sports betting in states that have legal sports betting. That number continues to grow. Iowa became the 10th US state with legal sports betting this week.
Fox-Stars Group Deal’s Details
As part of the deal, Stars Group agreed to spend a certain amount of advertising money at Fox Sports outlets. Meanwhile, the company gains the right to use Fox Sports trademarks for up to 25 years.
A key facet of Fox Corp’s investment includes the ability to own half of Stars Group’s sports betting, online poker, and online casino business. The deal also allows Fox Sports to acquire up to 50% of Stars Group’s U.S. business over the next 10 years.
Fox Bet the New Sky Bet?
The plan is to recreate in the United States the Sky Bet business model that did so well in the United Kingdom. Sky Bet rose to dominance in UK online gaming by capitalizing on its brand recognition and focusing on its technology.
Stars Bet bought SkyBet from CVC Capital Partners and Sky Plc last year, so the company has had a year to dissect SkyBet’s path to success. Partnering with Fox News on FoxBet lets Stars Group leverage a famous and beloved US brand name.
Whether the same business model works in the United States is another question. While the UK and USA have many similarities, there are distinct differences, too. The regulatory framework is one of the biggest differences.
Eric Shank on $9 Billion Industry
Fox Sports CEO Eric Shanks told Bloomberg Business in an interview that domestic sports betting, online poker, and online casino could grow into a $9 billion industry by the year 2025.
Shanks said of his company’s investment, “We are expanding the way we immerse fans in the sports culture they love. Digital sports wagering represents a growing market opportunity that allows us to diversify our revenue streams, connect directly with consumers and expand the reach of the Fox Sports brand.”
The deal gives Fox Sports the option, which is pivotal. At the moment, legal online gambling sits at a crossroads in the United States. Las Vegas Sands Corp CEO Sheldon Adelson wants to ban online poker and casino sites.
US DOJ’s Effect on Online Gambling Revenues
The U.S. Department of Justice went a long way to doing so in January 2019 when it announced a ban on interstate online card rooms and casino sites. The ban pivots on shifting interpretation of the 1961 Wire Act.
The online gambling sector still do not know whether the ban will stay in-effect, or how wide-ranging it might be. The New Hampshire Lottery is suing the Department of Justice over the ban. That lawsuit, which sits in US District Judge Barbadoro’s court, was joined by 15 US states. The legal battle is in its beginning phase.
