LOS ANGELES: Fox Sports, a unit of Fox Corporation, is buying 4.99% stake in gaming giant The Stars Group Inc.
The companies will jointly launch Fox Bet later this year, offering two products designed to stake a claim in the growing world of online betting. One will be free to play, offering customers cash and prizes for predicting the outcome of sports games. The other will offer the chance to place real money wagers in states with regulated online betting.
Stars and Fox Sports have entered a long-term commercial agreement through which FOX Sports will provide the group with an exclusive license to use certain Fox Sports trademarks.
The media company controlled by Rupert Murdoch and his family will pay $236 million for its stake in Toronto-based Stars, which last year bought Sky Betting & Gaming for $4.7 billion,
Stars currently intends to use the aggregate net proceeds 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.
Rafi Ashkenazi, chief executive officer of Stars Group, said: “We believe this strategic partnership uniquely positions us to build a leading betting business in the US, 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 US.”
Eric Shanks, chief executive officer and executive producer of Fox Sports added: “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.”
Under the commercial agreement, Fox Sports will grant to Stars 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, Stars 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 US business.
