Boston-based bookmaker DraftKings has sold the media asset it purchased only three years ago back to its founders, Musburger Media. Still, it is reported the two will continue to have a relationship with DraftKings advertising on the sports betting network.
Sell Out
Although the financial terms of the deal have not been disclosed, DraftKings has sold the Las Vegas-based media company, VSiN, back to those who created it. Longtime CBS sports announcer, Brent Musburger, is a well-known contributor to VSiN but it was his nephew, Brian, along with partner Bill Adee, who launched it back in 2017 through their Musburger Media vehicle.
DraftKings purchased the multi-platform sports betting-centric broadcasting company in March 2021 for $70 million, believing it would give the brand more exposure and visibility to audiences outside of its sphere. However, the returns were apparently not as impressive as the company hoped and thus began the search for a buyer.
“While a lot has changed in the sports betting industry over the past three-and-a-half years, our original vision for VSiN still holds and we are committed to delivering the most credible, independent information and analysis sports bettors can find anywhere,” said founder Brian Musburger in a prepared statement. “We truly appreciate the work we’ve done with DraftKings and look forward to continuing to collaborate on future projects. Bill and I couldn’t be more excited about leading VSiN into the future and cementing our position as a trusted authority in sports betting.”
Stephanie Sherman, Chief Marketing Officer, of DraftKings, stated, “DraftKings continues to optimize its investments in content and media to align with the most critical areas and needs of our business strategy, objectives, and goals. We want to thank Brian, Bill, and the entire team at VSiN for a great relationship, and we look forward to continuing to advertise on the network.”
DraftKings Does a U-Turn
The U.S. mobile sports betting market is barely six years old but many of the states that have adopted legislation to legalize and regulate it within their borders did not do so until a few years after PASPA was overturned in 2018. It took time for many lawmakers to come to grips with the fact that the faulty stigma of what was once seen as a shadowy industry was no longer and that mainstream acceptance was catching on like wildfire.
It then became clear that sports betting was big business as well as a robust revenue stream for the states that allowed it. But during that time, the mobile sports betting operators were charting their own course in what was virgin soil for America’s gambling industry. Trial and error are part of any new enterprise and establishing a brand, improving technology, and getting the word out to as many people as possible have been the hallmarks of marketing in this new frontier.
A blizzard of advertising and offering tempting promotions are at the root of building a customer base for the major players in the market but alternate channels of brand visibility have also been seen as viable pathways to success. DraftKings has had more success than any other top-rated sportsbook, aside from its archrival, FanDuel, and decided that buying a media outlet that specializes almost exclusively in sports betting would be a natural fit.
That assumption was likely bolstered by a study conducted by Macquarie Research that estimated media outlets could contribute 33% annual compound growth rate to online sportsbooks and iGaming companies. If it works there, why not here, was likely DraftKings’ logic to purchase VSiN.
“These deals have expanded well beyond traditional advertisements to include naming rights, click-through economics, and equity stakes,” according to Macquarie. “Ultimately, we believe the ‘grand slam’ opportunity is to replicate the success of Sky Bet in the UK as a model for media content integrations with betting apps.”
But commercialism can vary from place to place and what DraftKings initially believed would be a lucrative parallel marketing channel did not pan out as well as they might have been led to believe. This may give other U.S. sportsbooks cause for pause when considering acquiring media outlets to further their brand.
