The Canadian-based gaming company Stars Group (TSG), most widely known for its leading online poker brand PokerStars, continued its expansion into the online sports betting arena last week announcing a partnership with Major League Baseball (MLB). In an industry expected to grow to $155 billion in the next five years, a lot is at stake. Let's look at the details of the agreement and what it could mean for the Stars Group.
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Some necessary background information: A deal with Fox Sports
In May of this year, Stars Group joined with Fox Sports in a unique and revolutionary partnership between a national media brand and a sports betting company. Stars Group gained the rights to use Fox Sports' trademark and branding in its new sports betting app, Fox Bet. In return, Fox Sports, a subsidiary of Fox Corporation (FOX -0.43%), gained a 4.99% stake in Stars Group, a 10-year option to acquire a larger portion of the company's U.S. operations, and an annual marketing-spend commitment from Fox Bet.
The MLB deal
In an industry where trust is vital, aligning yourself with a trusted media partner like Fox is an important first step. Last week, Stars Group took this a step further, officially aligning with the biggest name in baseball. The company agreed to a multiyear deal with MLB to use its logos and trademarks within the Fox Bet app. Additionally, Stars Group gains access to MLB's official statistics and data feed. Specific details of the deal were not made public and probably won't be as MLB charges accepted applicants based on the size and scope of their business.
There are two major-league takeaways from this deal you need to be aware of. First, being able to call yourself an Authorized Gaming Operator of MLB is huge. New bettors looking for a trusted solution in a sea of legal and gray-area offshore options will gravitate toward the brands and names they know and already trust. An online betting option branded as a Fox Sports product that's also an officially authorized partner of the MLB will shine.
Second, access to MLB's official data feed gives the Stars Group a leg up on the accuracy of wagers they offer, the scope of the bets they're able to give, and another checkmark in the trust column. Other companies currently pull data and statistics from third-party companies aggregating the data on their own. The higher reliability factor of the data will give Stars Group a big win, as MLB Executive Vice President Kenny Gersch put it, "Our official data feed, including real-time and reliable game statistics, and league marks will enable The Stars Group to build unique and engaging gaming products around our sport."
So, what?
The bottom line here is competitive advantage. If the Stars Group can handle its newly acquired assets well, it stands to gain and retain a big piece of the growing betting market. In 2016, the Gaming Control Board of Nevada reported an impressive $1 billion bet in the state's sportsbooks on baseball. Add in the growth of the industry over the past few years, the offshore wagers that could return now with higher-quality options, the other states recently legalizing sports betting not included in this figure, and the rest of the world, and you've got a big field for Stars Group to play ball.
