Oh No Fubo: Streaming Company Backs Off Sports Betting Plans

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Fubo Sportsbook

FuboTV is looking for help to create the future of its Fubo Sportsbook product.

A challenging financial market led to FuboTV (FUBO) looking at internal cost-saving measures, which include potentially offloading its sportsbook plans, according to a shareholder letter distributed before Thursday’s second-quarter earnings call. According to the letter, its sports betting business is under strategic review.

“We continue to believe that an integrated wagering platform, offering both live video and a sportsbook, will result in the best viewing and gaming experience for customers,” the letter reads. “However, as we have evaluated how best to scale these capabilities in today’s market, we have concluded that we will no longer pursue this opportunity on our own.

“We are in internal and external discussions to determine the best path forward for Fubo’s gaming business and look forward to sharing more information.”

Fubo gives up solo sportsbook dreams

Fubo bought sports betting company Vigtory in January 2021 with ambitious plans to integrate its streaming product with sports betting. On Thursday’s earnings call, Fubo CEO David Gandler said the changes in the economic climate since early 2021 necessitate the move away from its optimistic start, a change from earlier times.

“We don’t see wagering as simply an add-on product to fuboTV,” Gandler said in early 2021. “Instead, we believe there is a real flywheel opportunity with streaming video content and interactivity. Our free-to-play gaming experience, which will be available to all consumers, will build further scale to FuboTV, essentially acting as another lead generator for driving subscribers to our streaming video platform and, ultimately, our sportsbook.

“We not only expect sports wagering to become a new line of business and source of revenue, but we also expect that it will increase user engagement on fuboTV resulting in higher ad monetization, better subscriber retention and reduced subscriber acquisition costs.”

Fubo Sportsbook continues, looks for help

The company debuted Fubo Sportsbook product in Iowa in November 2021 and since also launched in ArizonaIn May, Fubo Sportsbook took $450,000 in bets in Arizona, or 0.1% of the market. It handled $125,000 in Iowa, or 0.09% of the state’s online handle.

The operator also submitted an application to the New Jersey Division of Gaming Enforcement with plans to be live in NJ sports betting for NFL betting. Another unnamed market is near launch as well.

“While our disciplined sportsbook progress continues, in light of the rapidly-evolving macro-economic environment, we believe it is important to be even more capital efficient than originally scoped,” the shareholder letter reads. “We are taking steps to de-risk our business and have made the decision to no longer go down the wagering path independently.”

Wanted: Fubo partner or buyer?

There was talk at recent industry conferences about the future of integrated betting. As Fubo looks to back up on its plans, other operators could be eager to jump on board.

There are various paths Fubo could go down. One could include bringing on a strategic partner to help support existing sportsbook technology efforts, which appears to be the preferred pathway. Gandler played up that option on Thursday’s call.

“We’re very early in those conversations,” he said. “But I think the key message to investors is we’re not planning to go out and actually launch markets as we — given the market access deals we did.

“So, we are looking for partners. We will slow role until we find the right partner. But we’re having conversations. I would say we’re pretty early on.”

Fubo also could be an acquisition target, as it has market access to 10 states and certain technologies that might interest other companies. An acquisition could be as a content play for a sports betting company or a sports betting move for a bigger media company.

What happened with FuboTV?

Fubo grew its North American subscriber base to 947,000 customers in the second quarter, 41% year-over-year growth. With that came a 66% increase in North America revenue, up to $216.1 million.

Along with a tough global economic climate, both the streaming content and sports betting industries are in competitive and transformative times. So despite those increases, the company recorded a net loss of $116.3 million, a 22% decrease from a $94.9 million loss in Q2 2021.

Gandler said he is still bullish about the overall company, which projects 1.34 million subscribers by the end of the fiscal year. It appears executives would like to focus on one main area moving forward as it continues to hope for a positive cash flow by 2025.