The Stars Group, FOX Sports Announce U.S. Sports Betting and Media Partnership

Canada’s The Stars Group, parent company of the PokerStars family of brands, and US-based FOX Sports have announced a “national media and sports wagering partnership” in the United States. Among other things, the deal will result in a new sports-betting brand called FOX Bet, that will likely receive plenty of promotion and air time throughout the broad Fox Corporation-owned FOX Sports broadcast family, which includes numerous national and regional broadcast offerings.

Ongoing negotiations surrounding the tie-up had been the subject of industry rumor for some months, and the possibility of the partnership had been included in some recent TSG financial reports. The two companies are describing the deal as a “first of its kind” deal, which appears to reference an upcoming, two-way integration between FOX Sports’ broadcast offerings and the new Stars-powered FOX Bet platform.

According to a joint press statement, FOX Sports will provide The Stars Group with an exclusive license to use certain FOX Sports trademarks, and while it’s uncertain the extent to which the iconic Stars “red spade” logo will be incorporated into the FOX Bet brand and presence, there will almost certainly be some, to take advantage of Stars’ long-term brand recognition

US Sports LeagueThe two companies are expected to launch two products in the fall of 2019, likely to meet the firms’ strong desires to have a betting platform in place for the 2019 National Football League season, of which FOX Sports is among the primary broadcasters. According to the companies’ announcement, the first product offered will be a nationwide, free-to-play game, awarding cash prizes to players who correctly predict the outcome of sports games.

The second product, which appears to be the real-money FOX Bet wagering platform, “will give customers in states with regulated betting the opportunity to place real money wagers on the outcome of a wide range of sporting events in accordance with the applicable laws and regulations.” In conjunction with some of the state-by-state casino partnerships The Stars Group has also entered, the FOX Bet brand could quickly launch in virtually every state which has legalized sports betting over the past year and change. The single exception may well be the grandfathered state of all US-legal sports betting, Nevada, which has yet to legalize online sports betting and continues to have TSG-targeting “bad actor” laws in place regarding its sole legal online-gambling activity, online poker.

The deal is open-ended but could be very long-term, extending for as much as 25 years. Some financial specs were also announced. As part of the deal, Fox Corporation will acquire 14,352,331 newly issued common shares in The Stars Group, representing 4.99% of The Stars Group’s issued and outstanding common shares. That’s a deal at a price of $16.4408 per share, the prevailing market price, before news of the deal was announced. According to the announcement, “The Stars Group currently intends to use the aggregate net proceeds of approximately $236 million for general corporate purposes and to prepay outstanding indebtedness on its first lien term loans. The common shares issued to Fox Corporation are subject to certain transfer restrictions for two years, subject to customary exceptions.”

How the two companies are planning to integrate is summarized this way: “Under the commercial agreement, FOX Sports will grant to The Stars Group an exclusive license for the use of certain FOX Sports trademarks for a range of immersive games and online sports wagering, and certain exclusive advertising and editorial integration rights on certain FOX Sports broadcast media and digital assets. As part of the transaction, FOX Sports will receive certain brand license, integration and affiliate fees. In addition, during the term of the commercial agreement, The Stars Group has agreed to a minimum annual advertising commitment on certain FOX media assets. Prior to the tenth anniversary of the commercial agreement, and subject to certain conditions and applicable gaming regulatory approvals, FOX Sports has the right acquire up to a 50% equity stake in The Stars Group’s U.S. business.”

That skips over something really important. Assuming the deal receives regulatory approval, then all of The Stars Group’s offerings, including PokerStars, suddenly receive a powerful US-based benefactor, which may shift things in Stars’ favor as those “bad actor” provisions continue to pop up within US state-level legalization efforts. The Stars brand remains very popular with a US-based audience, but it has, since Black Friday, needed a new commercial champion. This deal likely provides that.

Rafi Ashkenazi, Chief Executive Officer of The Stars Group said: “We believe this strategic partnership uniquely positions us to build a leading betting business in the U.S., which represents one of the most exciting long-term growth opportunities for our company. Leveraging our proven media partnership strategy with Sky Sports in the UK, we are excited to partner with FOX Sports to integrate wagering into sports media and drive customer acquisition and retention in the U.S.”

Eric Shanks, Chief Executive Officer and Executive Producer of FOX Sports added: “FOX Sports is already synonymous with the best live sports events in the country and now 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.”

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