Action, Outkick Acquisitions Highlight Growing Heat Around Sports Betting

Action, Outkick Acquisitions Highlight Growing Heat
Cheyne Gateley/VIP

As the U.S. soon heads into its fourth year as a country where sports betting is no longer banned nationwide, publishers with sports betting verticals are becoming increasingly attractive M&A candidates.  

Look no further than the dealmaking activity of last week: Denmark-based sports betting media group Better Collective agreed to acquire The Action Network for $240 million, while Fox announced it acquired conservative-leaning sports news site Outkick for an undisclosed amount.  

And on a slightly different but still noteworthy and related track, five-year-old subscription-based sports site The Athletic, which publishes sports betting content, is still looking for a merger partner, WSJ reported last Thursday. The sports pub reportedly views the NYT as a leading merger candidate.  

It’s clear why the value of digital sports betting content is growing. More states legalizing sports betting likely helps drive new readers to gambling content entities (like The Action Network), which then have a bigger pool from which to potentially generate affiliate fees (via referring bettors to sportsbooks). 

The growing legalization of sports betting also probaby helps boost the number of U.S. consumers willing to pay a monthly subscription for sports betting content.  

As of May 7, 21 states and D.C. permitted single-game sports betting via retail and/or online sportsbooks, per the American Gaming Association (AGA). 

Legalized sports betting has long encouraged dealmaking in the media space due to the sheer size of the illicit gambling market. Likely bolstering this interest is the fact that the pandemic didn’t appear to completely derail the growth of legalized sports betting.  

Of the 11 states that offered legal sports betting in 2019 and 2020, seven saw year-over-year (YoY) increases in the amount wagered last year, per the AGA. 

Meanwhile, online gambling ad spend on local TV spots reached nearly $154 million in Q1 of this year, up from about $11 million at the beginning of 2019, per Nielsen.  

This momentum had already manifested itself by way of media company-sports betting entity partnerships prior to last week. DraftKings acquired Las Vegas-based sports betting media company VSiN in late March, while Dish Network and DraftKings earlier in the month partnered in a deal allowing certain Dish viewers to begin wagers from their TV screens. 

These deals bank on the idea that legal U.S. sports betting activity will continue to grow in the years ahead, though this growth in gambling might be better tracked by things like gambling app usage and amounts wagered, rather than things like linear TV sports viewership.  

For instance, the average audience of NBA and NHL games dropped, respectively, 27% and 8% between 2019 and 2021, VIP analysis recently found.    

Ratings drops shouldn’t be tied too heavily to sports betting, given big games are nationally televised while betting still isn’t legalized in every state. However, the declines do still imply legalized betting might not be the ratings savior some had hoped it could be.

Meanwhile, recent VIP analysis of Sensor Tower data found usage of the biggest U.S. sports betting apps surged during the week of the AFC/NFC Championships and the week of the Super Bowl. 

Perhaps that’s why we’ve seen more sports leagues embrace sports betting as of late. Just see the March UFC-DraftKings deal and recent statement by NFL Commissioner Roger Goodell regarding sports bettors. 

Leagues and sportsbooks cozying up will likely become more common as more states legalize sports betting. Up to 37 states might offer legalized sports betting by 2023, projects Eilers & Krejcik.  

But a notable hurdle to accelerating sports betting activity will be ensuring it’s convenient to do by doing things like enabling mobile betting in states where betting is legal.   

Despite this seemingly clear path to boosting gambling revenue, lawmakers in certain states may oppose making sports betting as widely accessible as possible over concerns of possibly contributing to gambling addictions among young adults.   

What lies ahead for the U.S. sports betting landscape is a main focus of one of Variety Intelligence Platform’s latest white papers, “Sports Betting.” The white paper marks VIP’s third in-depth sports betting-focused examination that analyzes the impact of legalizing sports gambling and how media companies are capitalizing. 

Read the full special report