The combination of one of the biggest names in gaming and one of the biggest names in sports may have seemed like a perfect fit in 2019. PokerStars announced a deal with Fox Sports for synergy on a new sports wagering product.
Sports betting in the U.S. became wide open a year earlier and branding a new mobile sports betting app using the Fox Sports name may have seemed like a can’t miss. But changing corporate goals and amid a more crowded sports betting landscape four years later, Stars owner Flutter Entertainment and Fox Corporation are now closing the Fox Bet platform.
“The decision to shut Fox Bet comes amid a reckoning among sports-betting companies that are under pressure to turn a profit,” the Wall Street Journal reports. “Companies are cutting costs after years of extensive spending on marketing campaigns as new states legalized sports betting.”
Shifting Directions
PokerStars and Fox looked like perfect partners when originally announcing the deal four years ago. The network broadcasts the NFL, college football, MLB, and other sports. Stars could harness Fox’s name recognition in launching the new betting product.
The agreement also allowed Fox to purchase 5% of the company for $236 million. But Flutter Entertainment purchased Stars in 2020 and that produced some different dynamics. The company is one of the world’s largest online gaming operators and owns brands like FanDuel, Betfair, PaddyPower, and others.
FanDuel is now the country’s largest sports betting operator, meaning Fox Bet became less of a focus for Flutter. The Fox platform, available in Colorado, Michigan, New Jersey, and Pennsylvania, is reported to have held less than a 1% market share.
Fox isn’t completely out of the picture, however. The company retains the rights to the sports betting brands, including the free-to-play Fox Bet Super 6 game, which the company heavily promoted on sports broadcasts. The Journal noted that Fox plans to continue running the Super 6 game.
Also, as part of the Flutter acquisition of Stars, Fox inherited the right to purchase up to 18.6% of Flutter. The company has up to 10 years to complete that transaction and company officials have hinted that was the direction Fox was leaning. FanDuel’s success appears to be a major reason for that possibility.
“When we look at the totality of our betting position, we increasingly think that the option that we have over FanDuel is the one that’s really important for us,” Fox CFO Steve Tomsic told financial analysts.
An arbitrator ruled in 2022 that the price tag for that purchase would be about $3.7 billion. Fox Bet is phasing out operations of the platform through Aug. 31.
Feds Looking into Allegations Against Las Vegas Casino Employees
The Nevada Independent dropped a major story on Tuesday involving a federal law enforcement investigation into Las Vegas casino employees. The allegations include that the employees paid debts to an underground gambling ring using casino assets.
The article also notes that employees also provided confidential customer data to the same gambling group, which reportedly operated for almost two decades.
“A state employee, who asked not to be identified for fear of losing his job, says federal agents have interviewed or taken statements from several former employees of the Nevada Gaming Control Board, and have inquired specifically about Resorts World President Scott Sibella, formerly president of the MGM Grand,” the Independent noted.
“Federal agents, according to the state employee, are investigating allegations hotel employees at MGM properties used comps and promo chips to pay off personal gambling debts to Wayne Nix, a former minor league baseball player, and money owed to an illegal sports betting operation Nix admits he operated with a handful of others.”
Nix pleaded guilty to illegal gaming charges and for not paying income tax on $1.5 million. Those who aren’t high roller casino players may not know too much about promo chips. These are often offered to many big money gamblers.
In a time where casinos face scrutiny for major transactions under anti-money laundering and Know Your Customer regulations, the promo chip values face usage limits and internal controls by casino staff. However, the Independent notes that these efforts can be circumvented.
“The chips can be ‘washed’ in large amounts at the gaming tables by savvy gamblers and redeemed at the casino cage for cash, according to experts,” the newspaper reports. “Some casinos have begun to phase out the use of promo chips in recent years because of the potential for abuse.”
Officials with the Department of Homeland Security and the Criminal Investigation Division of the IRS based out of California are conducting the probe. As of now, Resorts World, MGM, Sibella, and officials with the Department of Justice haven’t commented on the situation.
