Fubo Sportsbook eyes more action via crossover with company's virtual TV subs

➤ FuboTV customers are placing a greater number of bets and represent higher retention rates than sportsbook-only players.

➤ The company uses a flywheel approach, with the TV platform pushing subscribers to the sportsbook, which drives deeper engagement and advertising monetization.

➤ Fubo Sportsbook relies more on technology and the app's features than promotions to attract and retain bettors.

S&P Global Market Intelligence recently caught up with Scott Butera, president of Fubo Gaming. The subsidiary of sports-oriented virtual multichannel provider fuboTV Inc. houses the company's nascent sportsbook operation.

Butera discussed the performance of its initial mobile sportsbooks in Iowa and Arizona, synergies with its TV distribution business, and future launch and customer acquisition strategies. An edited transcript of the conversation follows.

S&P Global Market Intelligence: Fubo Sportsbook started in Iowa in November 2021 and in Arizona in December 2021. How are the early returns?

Scott Butera: We've been pleased. Early results point to stronger engagement, with crossover users on average placing a greater number of bets and higher retention rates on the sportsbook than sportsbook-only players.

What are some of the areas you're looking to enhance?

We will continuously iterate the app, which will include improved features and more product integration, connecting the TV experience to the sportsbook.

You have market access agreements for 10 states. Those are licenses to launch more Fubo Sportsbooks?

In addition to being operational in Iowa and Arizona, we have secured market access deals in Indiana, Mississippi, Missouri, Louisiana, New Jersey, Ohio, Pennsylvania and Texas. Typically, when a state awards sports betting market access and licenses, they give them to casinos or sports teams.

There are a few exceptions, including Tennessee, where you can get a license by just applying. Some states only grant market access deals to casinos, which then distribute them out to partners. In Arizona, we secured ours through a tribe, the Ak-Chin Indian Community.

You also have relationships with Caesars Entertainment Inc. and the Houston Dynamo, among others, correct?

We have four professional league and team deals, including with NASCAR and the NFL's New York Jets in New Jersey.

Sports betting was legalized in Ohio during the fourth quarter of 2021, after which we received market access via the NBA's Cleveland Cavaliers. Sports betting is set to go live in that state in January 2023. Our next step is to apply for a state license and then launch our integrated sportsbook and lounge experience at the [Cavaliers'] home, Rocket Mortgage FieldHouse.

We recently partnered with Major League Soccer's Houston Dynamo FC. Pending the enactment of legislation and regulatory approvals, our partnership with the team will pave the way for us to receive market access in Texas.

We have a fantastic relationship with Caesars, with whom we've partnered for market access in New Jersey and Indiana.

So which states will become home to the next Fubo Sportsbooks?

As a national company, our goal is to launch strategically across different markets over the next 24 months. That includes Indiana in 2022, pending regulatory approvals.

Are you looking to areas where there are strong clusters of fuboTV subscribers?

As we roll the app out across more markets, our goal is to convert our TV viewers to sports bettors and vice versa. Our focus is on states where we have a strong [regional sports network] and TV presence. The crossover between sports and livestreaming will play a strong part in creating a unified and synchronized experience.

FuboTV introduced pick'em predictive games on June 19. And users can bet on their selections via the sportsbooks in Iowa and Arizona?

Pick'em games are a close replicant to real money wagers. It's a great starting point for those who crave deeper engagement, are interested in betting, but don't necessarily know where to begin. The learning curve for sports betting can seem intimidating. Pick'em games offer players a risk-free way to get familiar and test their skills before taking the next step: downloading the Fubo Sportsbook app via a QR code and placing real-money wagers aligned with their [predictive] bets.

Who is the Fubo Sportsbook bettor?

We're strategic in our outreach since we have the unique opportunity to tap into an existing built-in streaming audience that passed 1 million paid subscribers in 2021. This creates a flywheel, with the TV platform driving customers to the sportsbook and the sportsbook driving deeper engagement and advertising monetization for TV.

People who bet on our platform tend to bet a little bigger, and viewers who watch sports for long hours tend to bet more — they are our target customers.

This is the first truly integrated TV/sports betting experience. Whereas most operators and media companies form external relationships, we are building this from the ground up, in-house, all within the same ecosystem.

For example, instead of folks going on ESPN (US) and separately opening their sports betting app, our platform is completely integrated and synchronized. Our customers remain in the same ecosystem with live odds directly synced on their app based upon what they are watching on fuboTV, even as they change the channel through our Watching Now feature.

And you deliver personalized messages/incentives to prospective and/or regular bettors?

We get to know and understand our customers and can create intuitive experiences by suggesting bets they are likely to act on. Having been with casinos for the majority of my career, what I've noticed is that sports betting on its own isn't enough. It's all about the experience. If you go to a casino, it creates huge profits for other businesses like food and beverage, hotels, retail spaces, etc. It's a cohesive interactive journey.

Sports betting is no different. It belongs to a sports-entertainment experience, which is why we created this platform. It's all part of the ecosystem, alongside pick'em games, FanViews, etc.

Fubo Sportsbook seems to have a differentiated strategy, touting its product quality and technology to drive usage, rather than relying on heavy promotion.

If you're a bettor, you care about three things: Can I place a bet quickly, and is it a fast, intuitive experience? Do I have reasonable limits? Is there good pricing on my bets?

We believe that those elements, coupled with the quality of our programming, can deliver an unmatched customer experience without having to rely on heavy promotion, which breeds more churn and less retention.

A lot of players motivated by promotions are extremely promiscuous, and they will bet on every platform and app. We are looking for players we can retain, who will see the benefits of that unified experience across multiple platforms.

But you do use some outside media to promote Fubo Sportsbook in Arizona and Iowa?

Yes, but a lot less than our competitors.

Is the NFL the leading sport to bet on?

We've seen gains across all sports, but the NFL and college football are the biggest. The NBA was strong this year. The NHL has been improving. With baseball, there is a lot of volume, but wagers tend to be at lower levels because there are so many games every day.

What about prop bets?

Props are increasing for the casual bettors, who are also interested in the parlays. The more experienced/traditional players look to outcomes, point spreads and moneylines.