Explanation of Why This Shut Down Took Place?
As part of its preliminary third-quarter results, FuboTV said that it would discontinue operations of Fubo Sportsbook immediately and exit the sports betting sector. FuboTV co-founder and CEO David Gandler stated in a news statement said that “keeping up with Fubo Gaming and Fubo Sportsbook in this hard macroeconomic climate will impair our capacity to achieve our long-term profitability goals.” FuboTV had previously stated that it hoped to be profitable by 2025 and had begun a strategic assessment in August in order to potentially find a partner for the sportsbook.
According to the firm, while “several partners displayed an interest in the business,” none of these alternatives would have allowed Fubo to cut its financial requirements while still generating acceptable returns for shareholders. As a result, we have made the challenging decision to abandon the online sports betting market immediately.” FuboTV intends to go into detail regarding the move during its earnings conference on November 4, which will also provide a comprehensive third-quarter picture and a full-year projection. It expects to end the quarter with $210 million in North American revenue, a 34% year-over-year growth, and more than 1.2 million paid customers, which is somewhat higher than previous expectations of 1,135,000 to 1,155,000 paid users.
FuboTV’s first attempt to join the sports wagering sector began in January 2021 with the acquisition of the interactive gambling business Vigtory. On the New York Stock Exchange, it was trading at $36.18 at the close of trade on the day of the announcement. FuboTV hit an intraday low of $3.93 shortly before Monday’s closing and was trading at $4.05 after hours.
Tough Times All Over
A Fubo spokeswoman confirmed Monday evening that the company’s online sportsbook had already ceased accepting wagers. “We are working with essential parties to ensure that players and their current accounts are correctly handled,” said Jennifer Press, the company’s senior vice president of communications, in an email to Covers. Fubo’s decision to close its online sports betting company exemplifies the difficult nature of the sector in general, particularly for a newbie sportsbook. Fubo Sportsbook was only available in three states; Arizona, Iowa, and New Jersey — but the firm stated in August that it needed a partner to offer both live video and online sports betting. And live sports are still Fubo’s main offerings.
According to the corporation, their “sports-first cable TV” FuboTV, a replacement product, features over 125 live sports, news, and entertainment networks and over a million paying members in North America. Furthermore, Fubo’s sports-betting schemes were not taking place in a vacuum. This year’s economic conditions have been significantly harder, with consumers being buffeted by increasing prices and interest rates. “Following our previously announced strategic review, we have concluded that continuing with Fubo Gaming and Fubo Sportsbook in this challenging macroeconomic environment would impair our ability to achieve our long-term profitability goals,” said David Gandler, co-founder and CEO of FuboTV, in a statement. “Therefore, we have made the tough decision to depart the online sports wagering market effective immediately. We look forward to sharing additional details and presenting our entire third plan. On our November 4 earnings call, we will provide third-quarter 2022 results and full-year guidance.”
Even streamers are struggling in the pay-TV industry.
Aside from gaming concerns, FuboTV competes in a market dominated by virtual multichannel video programming distributors such as Hulu, YouTube TV, Dish Network-owned Sling TV, Vidgo, Philo, and DirecTV. In Q2 2022, the segment recorded slow subscriber growth, gaining a total of 42,000 subs versus a gain of 409,000 in the previous quarter, and did nothing to offset the wave of subscriber losses caused by the faltering traditional pay-TV industry. FuboTV, on the other hand, believes it is on the right track. “We’re happy with this predicted performance and our progress toward our positive cash flow objective of 2025,” stated David Gandler, co-founder and CEO of FuboTV. Gandler stated that the corporation would give additional color and information. On Friday, November 4, the company will hold an earnings call to discuss its complete third-quarter 2022 results.
Subs Grow as the Cash Base Erodes
While FuboTV’s expanding subscriber base is a positive sign, the company’s overall financial status, particularly in terms of turning the financial corner, is not. According to the company’s early Q3 2022 figures, it expects to complete the period with more than 1.22 million paying customers in North America, a 27% increase year over year. It anticipates 350,000 in the “rest of the globe,” which includes Molotov, the French live TV provider bought by FuboTV in late 2021. FuboTV had predicted a North American audience of 1.13 million to 1.15 million and a ROW audience of 340,000 to 360,000. FuboTV plans to end the third quarter with at least $210 million in North America revenue, a 34% increase year on year, and at least $5.5 million in ROW revenue.
The business anticipates -$100 million in adjusted EBITDA and a cash and cash equivalents position of at least $300 million. FuboTV concluded the second quarter of 2022 with $378.8 million in cash and short-term investments. FuboTV said in an 8-K filing that it expects to “incur certain inconsequential expenses” due to the gaming-related rulings. Still, it also warned that it might incur more charges that it cannot currently predict. FuboTV also stated that it expects to incur approximately $70 million in non-cash impairment charges of intangible and noncurrent assets, “primarily relating to market access agreements,” as well as certain cash charges for the termination of certain contracts. The amount and timing of this cannot be further specified.
Struggle in Market
Fubo Sportsbook made its most recent foray into regulated sports betting last month in New Jersey, where it obtained access through a contract with Caesars in March 2021. That agreement also included Indiana, but Fubo Sportsbook did not debut in the state. It began operations in Iowa through Casino Queen in November 2021 and in Arizona through the Ak-Chin Indian Community the following month. Fubo Sportsbook also planned to enter Pennsylvania in the future months through a partnership with The Cordish Companies. Iowa and Arizona offer many mobile wagering choices, with the Hawkeye State having had mobile sports betting available for over two years before Fubo’s arrival. Fubo, according to data gathered by the Iowa Racing and Gaming Commission, in the 2022 calendar year, the sportsbook processed more than $1.9 million in wagers.
The sportsbook also made $116,822 in revenue for a 6.1% hold. The Hawkeye State set monthly highs for both handle and revenue in January, with $428,688 in wagers and $54,038 in income. Fubo Sportsbook lost money in three of the nine months this year, including September when it paid out $5,310 more than it received in wagers. Fubo Sportsbook did marginally better in Arizona, where legalized gambling is set to begin in September. According to the most recent data issued by the state’s Department of Gaming for July, it totaled little under $4 million in total transactions. It peaked at $895,232 in February, but volume has progressively fallen to $210,377 in July. This was less than half of the $459,181 wagered in June. Arizona’s biggest revenue month for Fubo Sportsbook was March, at $106,887.
Conclusion
FuboTV lost approximately $200,000 from Fubo Sportsbook in 2022. This is due to the high-interest rates and other financial issues caused by the pandemic. As a result, many bettors are reluctant to place real-money wagers. Multiple parties showed interest in the business, but none would have allowed the sportsbook to lower its funding requirement and generate sufficient profits for shareholders. This is why they opted to shut down.
