Could ESPN-Penn deal be replicated in Canada?
A scan of the coverage from this week's major announcement, and some conversations, sparked some thoughts about its potential impact on the gambling industry here on the home front.
n this issue:
A summary of the ESPN/Penn deal and the Canadian connection(s)
Flutter reports good news on the FanDuel U.S. front
A scrub of the ESPN-Penn deal coverage, and the Canadian connection(s)
That’s what you call ending the dog days of summer with some fireworks, some fanfare, and some WTFs.
Your somewhat sunkissed chronicler was tending to the aggregation-of-links part of our roles and responsibilities here at GNC HQ on Tuesday afternoon, when the Twitterverse or . . . Xspace (??) . . . was bombarded with a multitude of posts referencing news releases from ESPN and Penn Entertainment on a partnership to launch ESPN BET this fall. Penn will pay the Worldwide Leader $1.5 billion (U.S.) over the next 10 years and there’s a significant equity component to the deal. It’s also worth noting that Penn will create its own Hollywood-themed casino product although we wonder (tongue somewhat lodged in cheek) if we’ll one day see Adam Schefter’s Free Agent Frenzy game on the Penn igaming app.
Penn CEO Jay Snowden, during a Q2 earnings call yesterday that was totally trumped by the ESPN announcement, expects ESPN BET to be up and running in the 16 states where Penn currently has licences-to-thrill by the middle of the NFL season.
Included in the communique from Penn was the selling (back) of Barstool Sports to its founder, Dave Portnoy (who jumped on social media to put his own spin on the sequence of events faster than the Barstool studio crew reacting to a late-night pizza delivery):
As expected, the reaction to the news has been fast and furious. We’ve grabbed a small sample size of it from the TwiXverse:
From Eilers & Krejcik Gaming’s The Winning Line blog post this morning:
Also:
During our interview with former DraftKings and PokerStars executive Jeffrey Haas for this week’s episode of the Gaming News Canada Show podcast presented by Osler, Hoskin & Harcourt LLP, we asked him for his take(s) on the announcement.
“Portnoy seems to be the clear winner here,” said Haas. “I imagine he had a tremendous amount of leverage in a Disney-Penn deal where his approval was required so he was able to get his asset back effectively for free with some covenants in place.
“Disney effectively become profitable as a result of a $1.5-billion capital infusion table over the next 10 years. The question is really what are Penn going to realize from this deal because they have not had a tremendous amount of success with their investment in igaming to date.”
As Haas and someone else we spoke with about the deal mentioned yesterday, ESPN delivers a big brand, and perhaps more importantly, a sizable database that includes players of its U.S.-leading fantasy sports games, 105-million-plus monthly unique digital visitors, more than 370 million social media followers on various platforms, and 25.2 million ESPN+ subscribers (Disney released its Q3 earnings report yesterday, showing flat sub numbers for ESPN+, and a 10-per-cent YoY hike in ad revenue for “linear and addressable”, according to Disney boss Bob Iger).
The Canadian connection(s) to the deal
Of course, there’s a CanCon chapter to this story.
Creating the ESPN BET app will be placed in the hands of the Penn product team, many members of whom work out of theScore’s offices on the Toronto lakefront. Penn recently completed the migration of the Barstool Sportsbook app to theScore’s betting platform. So, now there’s a rebrand a comin’ with the ESPN relationship to a platform that combined technology and content from theScore’s news and scores app.
“We have been able to achieve sustained double-digit market share in both online sports betting and online casino in the province by leading with Ontario's top digital sports media brand, theScore, and utilizing our best-in-class technology, which has been built from the ground up with the North American markets and comprehensive media integration, not only in mind but as top priorities,” said Snowden. “This is a proven playbook and will be effective here in the United States as well. Between ESPN's portfolio of premier sports rights, massive social media following, deep fantasy database and best-in-class support media app, we have the opportunity to dramatically transform the way fans engage with sports content and betting here in the U.S. markets."
Snowden’s quote is a reminder that it’ll be business as usual for theScore Bet in Ontario (although we wonder if customers of theScore’s apps will start seeing ESPN content show up, including video provided by the worldwide leader’s rights agreements with sports leagues and major).
“We have seen firsthand the power of integrating media with betting from our experience with theScore Bet in Ontario, despite operating in one of the most competitive jurisdictions in North America,” Snowden also said this week, referring to theScore’s long-standing investment in editorial content which goes back to the John Levy’s launch of Headline Sports in the late 1990s.
On the tech/product front, the vice-president of talent for theScore called the announcement good news for stakeholders in the tech industry across the true north, strong and free:
Yesterday, we spent some time on the cellphone speaking with some knowledgeable types around the Canadian sports media and sports betting scene. From those conversations came some questions, a few answers, some possibilities, and some that-ain’t-happening comments:
Could we see a Canadian media network (starting with TSN and Sportsnet) launching its own sportsbook?
“For certain, every media company in Canada has already considered it and may be engaging in active discussions about it right now,” said Haas, who was the senior VP of international strategy at DraftKings when it acquired VSiN in March 2021.” The question is would you rather be an operator or rather be a partner or affiliate. The margins are much better as a partner and as an affiliate because you get paid no matter what.”
Media companies are seeking new revenue streams to make up with the increase in cord-cutting as the younger generation turns to subscription streaming services and free, ad-supported streaming television (FAST) channels, and the riding into the sunset of radio.
On the other hand, TSN has a long-term, lucrative partnership with FanDuel and the network - along with its parent Bell Media - are raking in revenue from other operators, too. It’s the same story at Rogers Sports & Media, where DraftKings and Bet365 have been generous with their advertising dollars. The advertising and marketing spend by both regulated operators in Ontario and OLG have been a lifeline to a struggling Canadian media business coming out of the COVID-19 pandemic.
It’s a pretty safe bet (see what we did there?. . . ) that if one Canadian network launched its own sportsbook app, the other would follow suit and there’s not a hope in H-E double hockey sticks that a sportsbook will pay anywhere close to what Penn paid to be partners in TSN BET or Sportsnet BET. There are also more regulatory hurdles such a venture would face in Canada compared with our southern neighbours. And, with only regulated gambling taking place in Ontario, would a national media brand really want to launch a one-jurisdiction sports betting brand?
Also, Sportsnet’s national rights deal with the NHL expires in some 36 months, and chances are a lot of time and brainpower is already being spent on what we confidently wager will be a much different deal beginning with the 2026-27 season.
Finally (on this topic), FanDuel TV launched one year ago later this month, and it’s not a reach to assume there are plans to bring it north of the border at some point.
Does ESPN BET make a border crossing?
ESPN has hinted at bringing its network to Canadian cable carriers in the past, although it’s a given that the folks at the Worldwide Leader have been reminded by the Bell Media suits that its International division has a 33-per-cent ownership stake in TSN. The American sports media giant has a well-known brand in the Great White North and is back in business with the NHL once again.
Still, the ownership stake in TSN, Penn’s ownership of theScore, and only one regulated Canadian market - albeit the fifth largest jurisdiction in North America - make this a longshot?
Presenting. . . . MLSE BET?
Before you cancel your subscription or email us to make sure we didn’t take a two-hander to the noggin’ at huff and puffers hockey last week, hear/read us out here. Maple Leaf and Sports Entertainment is the country’s largest sports and entertainment company, owns four major professional sports franchises (along with the AHL Marlies, and a good shot at landing an WNBA expansion team), and its ownership group includes. . . . Rogers and Bell. MLSE also has an in-house digital labs and technology team to collaborate with a sportsbook partner on an MLSE-branded app.
The app could feature TSN and Sportsnet-branded features (TSN’s exclusive deal with FanDuel would necessitate some negotiating, but hey, we’re blue-skying here), and also integrate content from Canada’s two sports media entities. Real Sports would become the MLSE BET retail sportsbook and restaurant, and Scotiabank Arena and BMO Field would also include an MLSE BET experience on-site.
The proverbial fly in the ointment here is which operator would have the interest and a deep-enough digital wallet to pay MLSE. As pointed out earlier, it won’t be the well-established sportsbooks, which we suspect are leading the pack of 46 operators in Ontario.
FanDuel keeps rolling in the U.S. of A.
Flutter Entertainment released yesterday its interim financials for the first half of the year, and CEO Peter Jackson heralded the performance of its FanDuel business in the U.S. of A. (as reflected by the image we grabbed from LinkedIn posted by FD CEO Amy Howe).
“The first half of 2023 marks a pivotal moment for the Group, with our US business now at a profitability inflection point, helping transform the earnings profile of the Group and significantly enhance our financial flexibility,” said Jackson in a statement. “The US delivered another exceptional performance. This profit profile provides us with a clear platform to invest materially in the second half, as we strive to continuously improve our customer offering.”
There was nary a mention of FanDuel’s Ontario business in Flutter’s financial statement, or during Jackson’s appearance on an investors call early yesterday morning. So, your curious correspondent reached out to the folks in charge of FD on this side of the 49th parallel and received this statement from FanDuel Canada general manager Dale Hooper.
“Today’s earnings announcement marks a pivotal moment for FanDuel after it generated $100 million in profit from the US market, all while adding two million customers and capturing almost half of the online sports betting market,” said Hooper. “The growing strength of the FanDuel brand in North America alongside the increasing competitive advantages we’re deriving as part of Flutter provide great confidence about our Ontario business and its prospects in the second half of the year.”
On the Home Front
Sports betting and platform business Amelco has received the blessing - and a supplier’s licence - of the Alcohol and Gaming Commission of Ontario.
Mark Keast, for CDC Gaming Reports, writes about what’s next for the relationships between sportsbooks and sports properties in Ontari-ari-ari-o.
Speaking of Keast, he also wrote on the OLG announcement that it recently made quarterly payments totalling more than $43 million to 29 Ontario communities that host gaming venues.
Jack Tadman wrote on the GME Law blog about the AGCO’s deft handling some 10 months ago of integrity concerns around UFC as a best-practice example for other sports leagues and regulators to follow.
FOGNC and PointsBet Canada CCO Nic Sulsky joined Andrew Applebaum on a new episode of the Toronto Legends podcast.
Playgon Games, the Vancouver-based games developer, has completed integrating its online gaming suite into Pariplay’s Fusion program.
Canadian fintech company Nuvei has renewed its relationship with 888.
From the crack communications team at OLG: someone turned a $200 ProLine retail ticket last week on an eight-leg parlay into an $87,470 win. Also, a whopping 75 per cent of the futures action to win the singles title at the National Bank Open men’s tournament in Toronto is on Wimbledon champ Carlos Alcaraz. Maria Sakkari attracted 30 per cent of the pre-tournament action to win the women’s event in Montreal.
Classified (Jobs) Information
BV Group is seeking a Retention and Engagement Executive - Emerging Markets.
DraftKings is hiring for its Las Vegas office a U.S. Sports Trader, Data Collection.
Kindred Group has an opening for a Marketing Manager, North America.
The Responsible Gambling Council has a hybrid role available for a Senior Researcher, Research and Advisory Services.
Betting Jobs posted on its LinkedIn page about the igaming opportunities currently up for grabs in the Great White North.
Flutter has an opportunity in Ireland for a Lead Corporate Sourcing Manager.
Rivalry has an opening for a CRM professional to join its team in Peru.
Pinnacle is looking for a Salesforce - Marketing Cloud Contractor.
Startup PlayEngine is seeking senior front-end engineers.
Gaming company Razer has a cornucopia of career opportunities currently available.
Prophet Exchange has an opening for a Business Development Representative.
The owners of the New Jersey Devils are in the market for an Analyst, Hockey Analytics.
The International Tennis Integrity Agency is seeking a Finance Analyst.
Toronto-based Oak View Group has a one-year contract opportunity for a Senior Manager, Brand Consulting.
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