The deal market between publishers and sports betting companies is in a correction, according to media and agency executives.
The “endless supply of customer acquisition marketing budget has gone,” said Sam Yardley, evp of North America at sports marketing agency Two Circles, adding that large sports betting companies are focused on maximizing customer lifetime value.
After a surge of investment as sportsbooks fought to obtain more market share across the U.S., sportsbooks are now scrutinizing and even terminating some deals with publishers, signaling that some of these partnerships haven’t worked all that well.
As more states legalize sports betting, sportsbooks are finding it harder to “throw money at customer acquisition” and have that result in conversions, Yardley said. Sports betting is legal in 34 states and Washington, D.C., and 26 of those states have online and mobile sports betting options (though notably not California or Texas). Americans have spent more than $220 billion on sports betting since 2018.
In March, Gannett and German-based sportsbook Tipico agreed to terminate a five-year deal three years early. Gannett had initially entered into the agreement with Tipico in 2021, and last year announced the deal was reworked to remove the exclusivity clause.
Both companies “mutually consented to terminate” the deal altogether, a Gannett spokesperson told Digiday.
During a quarterly earnings call last year, Gannett CEO Mike Reed alluded to Tipico’s slow growth in the U.S. market. “Their expansion has been slower than anticipated, and they still operate in only two states,” Reed said.
Free to work with other sportsbooks, Gannett announced in February a multi-year deal with Gambling.com Group. The termination of Gannett’s agreement with Tipico “allowed us to lean more fully into our partnership with Gambling.com,” the spokesperson said. They added that the new partnership with Gambling.com is “already pacing ahead of expectations in its first year.” The company is working with other sportsbooks for upcoming football season sponsorships, they said. Gannett declined to answer further questions.
Brian Becker, svp of marketing of Tipico North America, told Digiday that this decision was due to Tipico’s growth in its game-watching experience, a result of its marketing efforts with local media companies like Gannett. “This momentum validated the efficacy of the marketing strategy, prompting us to shift our attention towards the markets where we are active, instead of pursuing national partnerships,” he said.
Sports betting companies and publishers were partnering up left and right over the past few years, in an effort to generate new bettors for sportsbooks in exchange for additional revenue to sports publishers in the form of cost-per-acquisition models and revenue shares or flat fees on content production deals.
A publishing executive, who traded anonymity for candor, said their company is more than halfway through their five-year partnership deals with two large sports betting companies, and is bringing in revenue from other companies in that category.
“Deals like the ones we have drive up new users, get greater engagement or [lifetime value] on existing users and they’re very data driven. [The sportsbooks] can tell what’s working and not working,” they said. “If operators are not gaining enough market share… [or] enough traction, then you’re seeing some of these businesses sunset.”
Deals that have gone south
Three years after acquiring Barstool Sports, gambling company PENN Entertainment sold the company back to founder Dave Portnoy last week — for $1 (not a typo) and 50% of any future sale of the publisher — and instead signed a $2 billion, 10-year deal with ESPN. PENN will rebrand the sports betting app Barstool Sportsbook to ESPN Bet.
Fox is sunsetting its sports betting site Fox Bet this month, after the digital sports betting site failed to grow, The Wall Street Journal reported. It attracted just 1% of the online sports betting market, while its competition — FanDuel and DraftKings — hold more than 70% of that market.
The Boston Globe’s parent company Boston Globe Media Partners was sued in May by sports betting media company Better Collective, claiming that the Globe owed the Danish company more than $750,000. The initial deal struck in August 2022 was supposed to have The Globe produce sports betting content for a new section of its website. Better Collective would provide ads for sports betting operators — and The Globe would get a cut from affiliate links.
The deal was terminated in March. The Globe filed a countersuit, saying it dedicated a dozen employees to the betting page and that Better Collective did not hold up to its agreement to provide hundreds of betting-related articles for the vertical. The Globe is seeking $1.75 million.
Publishers still betting on sportsbook revenue
Sports betting operators and media companies told Digiday they are still committed to deals with publishers, despite the apparent market correction.
“We take a data-driven and highly disciplined marketing approach, strategically scaling marketing initiatives throughout the year, which has produced positive results,” a DraftKings spokesperson told Digiday. They declined to share if marketing budgets had changed year over year.
Other publishers Digiday spoke to have not seen their partnerships go south yet.
Front Office Sports signed a deal in September 2022 with Australian sports betting operator PointsBet to create a thrice-per-week newsletter. Front Office Sports got a “six figure” flat-fee payment deal from PointsBet, which wanted to find ways to decrease their customer acquisition costs, Front Office Sports CEO Adam White said.
The one-year deal has driven more than 1 million app sessions, 600,000 bets and 100,000 deposits (or the money people put into their PointsBet accounts), according to White. The deal also included newsletter amplification, digital ads onsite and social posts.
White said he wasn’t worried about finding revenue from sportsbook partners once the deal ends later this year. “There is increasing competition for audience and wallet share [and] I think that it benefits most publishers that have engaged sports or sports adjacent audiences,” he said.
Vox Media locked in a deal in 2019 with DraftKings to create a new hub with its network of sports blogs under SB Nation, called DraftKings Nation. It was rebranded to DraftKings Network in June.
The site was renamed “to be in line with their overall media partnerships and ambitions,” said Ryan Pauley, president of revenue & growth at Vox Media. Since launching, the “total user base has tripled,” he said.
DraftKings and Vox sell ads on the site through Vox’s ad platform Concert, but the deal has expanded to additional ads and custom integrations on audio, social and video shows, as well as custom editorial packages, Pauley said. Vox Media and DraftKings are also planning to co-host an event to kick off the NFL season later this year, he added. Vox Media’s team dedicated to DraftKings Network has “scaled up” in the past five years, Pauley said, but he declined to share how big the team was. He also declined to share the financial terms of the partnership.
New sportsbook entrants spending to break through
Though some sportsbooks and publisher deals are getting shuffled, new sports betting competitors are putting marketing dollars behind media companies as the gambling market in the U.S. grows and the largest players set their sights elsewhere. Some publishers are counting on these new clients for additional revenue.
A sports podcast company had a three-year, multi-million dollar investment deal with a large sports betting company that ended earlier this year. An exec at that company — who requested to remain anonymous to speak freely — said that while sports betting companies haven’t been their biggest source of revenue, it is in the “top five.”
The exec said they’ve seen more ad spend from “younger and growing” sports betting and sports fantasy advertisers — such as Chalkboard and ThriveFantasy — in the past 18 months, in the form of ad spots, custom segments, product placement and social posts.
“Maturation [of this market] is happening, but that doesn’t mean spending is over,” they said.
The first publishing executive said they have not seen a pullback on investment from its sportsbook clients. They make money from guaranteed licensing fees or media spend, as well as additional revenue from first time deposits or CPAs, which are in the $250-300 range.
“We have seen consistent growth, and relatively high spending in the category,” the exec said. “It’s a lot easier to drive new users and first time depositors when a new state is onboard… so we focus on engagement, re-engagement and [lifetime value].”
The publisher and its sportsbooks clients have created new betting categories in new markets to do this, they said.