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FuboTV (FUBO) stock surged while announcing plans to buy online sportsbook startup Vigotry, making the sports-centric Internet-TV provider the latest company capitalizing on the emerging trend to legalize online sports betting in the US.
Terms were not initially disclosed for the deal, which is expected to close in Q1 2021. It positions Fubo, founded in 2015 as an internet-delivered pay-tv operator, as more of a hybrid type company. Much smaller in scale than DraftKings and FanDuel in the sports betting realm and smaller than Hulu + Live TV, YouTube, and Sling TV on the virtual MVPD front, the acquisition positions a strategy of blending the two businesses together.
FuboTV plans to integrate Vigotry into its TV platform. Vigotry will also be available to those who do not subscribe to FuboTV. Plans are to launch the sportsbook before the end of the year.
Starting only six years ago, FuboTV began streaming European soccer matches to American television audiences. Now with a broader base of programming, analysts envision its service as one of the new alternatives to traditional cable TV packages. FuboTV’s bundle costs $60 a month, recently adding a suite of Disney channels plus ESPN. Prices for rival subscriptions, which often are much broader, are priced around $65.
Co-founder and CEO David Gandler said the Vigtory acquisition will create multiple revenue lines, making FuboTV less vulnerable to cord-cutting. Once known as “skinny bundles,” internet-delivered TV packages have been met with mixed results. For example, AT&T and Sony have shut down their offerings while leading players YouTube and Hulu have raised prices significantly.
With new US states set to begin online sports wagering operations in 2021 including Michigan set to launch this month and Virginia in February, the market for mergers and acquisition is in a flurry. Also, significant news dropped last week indicating New York Gov. Andrew Cuomo’s attitude reversal to pinpoint online sports wagering as part of his priorities for 2021. A major opportunity for the sports betting industry.
Commenting on the diversified opportunity Gandler said:
The sports betting side allows us to increase the funnel. We’re going to be targeting customers with our free-to-play app, which adds more people to the funnel who care about sports. We think it’s going to increase engagement and retention, which we think is going to increase monetization.
The free-to-play app is powered by animation software from Balto Sports, recently acquired by Fubo in December. In building the process, Gandler’s vision in for the sportsbook to enable on-screen betting so that viewers will be able to simultaneously wager as they watch games, though that will likely take several years to develop. Many technology and regulatory hurdles will have to be cleared first. But in a market estimated to be worth more than $150 billion by 2024, several other companies will have ambitious goals. In Gandler’s view, “it’s not a zero-sum game,” as Fubo could profitably co-exist with many other competitors.
Vigtory was founded in 2019 by Sam Rattner and was backed by SeventySix Capital. Rattner previously founded Engine Sports, a back-testing engine allowing retail sports bettors the ability to build algorithmic betting strategies within an interactive experience.
Scott Butera, who was President of Interactive Gaming at MGM Resorts International and played a key role in launching BetMGM, joined Vigtory as co-CEO in 2020. Prior to MGM, Butera was Commissioner of the Arena Football League and held management posts at numerous casinos and gaming companies.
The company is only licensed in Iowa thus far while in discussion with other US states for approval Under the newly proposed acquisition, both Butera and Rattner will join FuboTV’s gaming division as President and COO, respectively.
On Tuesday, upon news of the Vigtory acquisition, Fubo’s share price increased 13%.
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Larry Gibbs is both a seasoned journalist and a respected online gaming industry consultant. His wry commentary & sharp analysis have appeared in numerous top gaming and sports wagering publications. He has also served as Vice President of US Gaming Services, a marketing research organization with 15 years of experience in US online wagering. He has spoken at noted gaming industry conferences including G2E, GiGSE, and NCLGS.
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