Yahoo announced the acquisition of social sports betting operator Wagr on Tuesday, a deal the company believes will allow it to augment plans to create one of the most compelling fantasy and gaming products on the market.
Wagr, a peer-to-peer sports betting app, became the first social sports betting operator to receive a license in the U.S. last year. The Yahoo deal comes at a time when the sports betting industry is resetting expectations on the value of comprehensive media partnerships, as the challenges of acquiring customers at a moderate cost intensifies.
“The acquisition of Wagr is an exciting step in the development of the next generation of Yahoo Sports’ gaming portfolio,” Yahoo CEO Jim Lanzone said in a statement. “Wagr stands out for their innovative emphasis on community and social engagement in sports gaming, which aligns perfectly with the Yahoo award-winning fantasy platform that has brought tens of millions of fans together around their love of sports for over 20 years.”
With the acquisition, Wagr will be fully integrated into Yahoo Sports, the companies said in a t press release. The acquisition has already closed, and of the deal were not disclosed.
A new twist with social sports betting 5t212b
Unlike traditional sportsbook operators, Wagr allows s to bet against their friends through a peer-to-peer network. While two friends engage in exchange betting, Wagr sets the odds for a given event, then handles the payment component of the bet settlement process.
Instead of wagering against the house, for example, two attorneys from the same firm can use the Wagr platform to bet against each other in a head-to-format. Wagr charges a 5% transaction fee on bets, far below the traditional 10% vigorish assessed by most mobile sportsbooks.
Shortly after completing a $12 million Series A funding round, Wagr launched in official sports betting partner of Nashville SC, a Major League Soccer franchise. By the fourth quarter of 2022, however, Wagr had abruptly shut down its app without any explanation.
"Yahoo is acquiring peer-to-peer sports betting app Wagr.
The company seeks to use its fantasy sports base to grow betting between friends and colleagues."
Fantasy Sports Giant Yahoo Acquires Sports Betting Apphttps://t.co/kG3oT4iyTc via @FOS
— Alfonso Straffon 🇨🇷🇺🇸🇲🇽 (@astraffon) April 25, 2023
Mario Malavé, co-founder and CEO of Wagr, believes that Yahoo’s combination of scale and engagement will provide Wagr with an opportunity to offer social betting to a large volume of fantasy sports s on the site. Yahoo ranks as the second-largest fantasy sports platform on the internet, just behind ESPN.com. In March, Yahoo Sports received 91.6 million visits, according to digital data tracking company SimilarWeb, up 26.8% from the previous month.
“ing Yahoo allows us to continue delivering on our mission to connect fandom to social gaming while elevating our ability to execute through expanded resources, new partnerships, and technological capabilities,” said Malavé, in the statement.
Revised expectations for media deals 6n2e6j
Yahoo previously secured a multi-year digital media partnership with BetMGM in 2019. The deal enabled BetMGM to integrate into the Yahoo Sports app, while betting transactions took place on the BetMGM platform. BetMGM still operates a standalone platform outside of the Yahoo partnership.
At the same time, few deals between major sportsbooks and media conglomerates have been struck since PointsBet’s partnership with NBCUniversal in 2020. As sportsbooks have found it difficult to acquire new customers at a low rate, operators have reassessed the value of long-term partnerships with leagues, teams, and media networks.
Addressing stock analysts on DraftKings’ 2022 fourth-quarter earnings call, CEO Jason Robins revealed that the company had to discontinue a few of those deals to reach its goals on efficient marketing. And last fall, DraftKings, but a deal was not finalized.
Sports betting operators are also taking a closer look at conversion rates from other verticals. Fanatics CEO Michael Rubin disclosed that the sportsbook is converting “between 2 and 2.5 percent of customers” from its e-commerce business without offering promotions.
“We’re pretty bullish. I’m either going to be right, or I’ll tell you that I was wrong and I screwed up."
– Michael Rubin, @Fanatics (@MattRybaltowski)https://t.co/Pzejwvqltk
— Sports Handle (@sports_handle) April 20, 2023
High conversion rates from team partnerships have also become tough to attain. While sportsbooks initially sought conversions from about 5% of season-ticket holders, operators may now be pleased with a rate closer “to 0.5 percent,” an industry expert told Sports Handle. A lingering question as Yahoo rolls out the Wagr brand centers on how the company will be able to convert fantasy sports s into social sports bettors.
Neither Yahoo nor Betr detailed plans for sports betting expansion into other states in Tuesday’s release.
