It did not take long for an internal review to determine Fubo Sportsbook had no path forward, even with potential partners.
Parent company FuboTV announced Monday it will shut down its sportsbook, which operated in Arizona, Iowa and New Jersey.
“Effective immediately, Fubo Sportsbook is no longer taking bets,” a company spokesperson told LSR. “We are working with necessary parties to make sure players and their existing accounts will be appropriately handled.”
The decision wraps up the strategic review announced Aug. 4 in a shareholder letter. Shareholders of FUBO seemed pleased with the decision, as the stock jumped double digits in early trading Tuesday.
Fubo Sportsbook business plan never caught on
Fubo’s sports betting plans revolved around leveraging synergy with its FuboTV streaming service.
Its sportsbook offered a twist on the second-screen experience. With a streaming and sportsbook account linked, the Fubo Sportsbook app could bring up markets for whatever the user was watching on their TV, as demonstrated in this video.
The sportsbook had little to show in terms of market share for its efforts, though. In Arizona, it had a 0.07% handle share and a 0.02% revenue share in July. The brand had similar results in Iowa with a handle share of 0.13% and a revenue share of -0.02% in September.
Meanwhile, the company pre-announced it expects to report an adjusted EBITDA loss of $100 million for the third quarter.
Who were Fubo Sportsbook license partners?
These three entities partnered with Fubo in its live states are now looking a new sports betting partner:
- Arizona: Ak-Chin Indian Community
- Iowa: Casino Queen Marquette
- New Jersey: Caesars (also partnered in Indiana, but not live)
Rationale to shutter Fubo Sportsbook
The review found continuing to operate Fubo Sportsbook would hurt the company’s chances of hitting its 2025 profitability targets, even with a partner:
“Given these goals, the company has now completed its previously announced strategic review of the Fubo Gaming business. While multiple parties expressed interest in the business, none of these opportunities would have allowed Fubo to lower its funding requirements and generate sufficient returns to shareholders.
“As a result, FuboTV will close its Fubo Gaming subsidiary and cease operation of its owned-and-operated Fubo Sportsbook effective immediately.”
The company will provide more color on its Nov. 4 earnings call, CEO David Gandler said in the release.
NJ launch happened mid-review
Shutting down the sportsbook entirely is a bit of a surprise considering the company continued with its NJ sports betting launch in early September.
Fubo still sounded bullish on its chances to keep its sportsbook alive in the launch announcement:
“The launch reinforces FuboTV’s commitment to interactive wagering following its recent decision to place its online wagering business under strategic review. The company continues to believe that an integrated wagering platform, offering both live video, and a sportsbook, will result in the best viewing and gaming experience for consumers.”
Shutting down still hits the wallet
Closing the sportsbook might be the best financial decision, but it will still come with a cost.
First, the company will incur a non-cash impairment charge of around $70 million, mostly for its market-access agreements. That essentially means it is taking a loss on its balance sheet for money spent related to the betting business, such as whatever it cost to land a partnership with the Cleveland Cavaliers.
There will also be “immaterial charges” related to severance and other employee-related costs. That likely includes Scott Butera, a longtime gaming exec who joined Fubo after the company bought Vigtory for its sportsbook platform.
There will also be cash charges for the early termination of certain contracts.
Will everyone get paid?
According to a notice of dissolution shared by EV Analytics’ Jon Lerner, the Fubo Gaming subsidiary does not have many assets left.
“Although Fubo Gaming continues to tie up some remaining loose ends, it does not foresee a scenario in which it will have any remaining assets to distribute to its few remaining creditors. If that should change, Fubo Gaming or its advisors will reach out to you and provide and update.”
That does not reflect the business outlook for the parent company. Along with the shutdown announcement, FuboTV pre-announced that its North American revenue should grow 34% for the third quarter.