X, the social platform formerly known as Twitter which is now owned by Elon Musk, the globally recognizable entrepreneur, investor and businessman behind SpaceX and Tesla, is reportedly in talks with the leading sports betting and iGaming company, BetMGM. Last week, a report released by Fortune suggested that the betting and online gambling operator is considering options for a partnership with X.

The latest announcement comes some two weeks ahead of the Super Bowl LVIII, one of the most-anticipated National Football League (NFL) events for the year. The 2024 Super Bowl LVIII is scheduled to take place at Allegiant Stadium in Las Vegas, Nevada.

The recently released report suggests that BetMGM is exploring a partnership that will see the addition of sports betting odds to X. In addition to sports betting odds, X may soon be able to promote BetMGM by featuring a direct link to the sportsbook. This will help more users to familiarize themselves with the brand.

The potential partnership is expected to bring benefits for the two companies. Namely, BetMGM will be able to reach new customers. On the other hand, X users will be able to engage in accessing odds during live events while the platform will tap into a new revenue stream.

The Deal Will Help Diversify the Platform’s Revenue Streams

Currently, X is renowned for its popularity, especially during live events. This is why the potential partnership does sound reasonable and is expected to benefit the duo. During the halftime show of the Super Bowl last year, X crashed due to heavy traffic, media reports confirmed at the time.

While the collaboration may help BetMGM engage with new bettors and sports fans, it also complements one of Musk’s goals for X which is to diversify the platform’s revenue streams. Besides advertising, currently X benefits from subscriptions but the platform also relies on innovations which is precisely the collaboration with BetMGM.

As one of the leading sports betting and iGaming operators in the US, BetMGM currently has a presence in more than a dozen states. The company is a joint venture between industry giants Entain and MGM Resorts International and has established a strong footprint among bettors across the country.

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The government in China has been cracking down on gambling for several years now. In light of the country’s strict laws on gambling activities, law enforcement and other agencies constantly monitor different activities and investigate cases of illegal gambling or other gambling-related crimes.

Amid the crackdown on gambling, online content platforms have reportedly taken action by removing live streaming features like lucky draws, actions that slashed their revenues for the latest quarter. As reported by Reuters, Tencent Music, as well as NetEase’s Cloud Music, have excluded live streaming features from its offering.

Analysts have previously voiced their concerns that such live-streaming features may be used for illegal gambling. However, none of the companies have officially addressed such concerns but rather released other reasons for the halt of certain live-streaming features.

For example, Tencent confirmed that the recent change seeks to make it more “music-centric.” Yet, upon releasing its second quarter of 2023 results earlier this month, the company confirmed that Tencent Music has seen a decline of 24% year-over-year in its social entertainment revenues, where the live streaming segment is positioned.

Similarly, Tencent’s game broadcasting platform that resembles Twitch, Huya, also posted a decrease in its social entertainment revenues for Q2 2023 that dipped by 16% year-over-year. Addressing the changes to its live streaming features, Huya said it sought to elevate the experiences for its customers and create a “healthier” atmosphere.

On the other hand, NetEase’s Cloud Music, a popular music streaming service, reportedly also excluded some live streaming features. The change was described as an improvement of its “internal controls mechanism” in combination with “stricter monitoring over irregular user activities.” Unsurprisingly, Cloud Music’s social entertainment revenue in Q2 this year also fell by 24% when compared to the corresponding period in 2022.

The Crackdown on Gambling Continues

While the aforementioned companies haven’t officially linked China’s ongoing crackdown to the halt of some streaming services, analysts predict further impact. 86Research’s analyst, Charlie Chai, predicted that the ongoing efforts against gambling may eliminate between 20% to 70% of the revenue from live streaming. According to him, this depends on the popularity of each of the streaming platforms.

“We expect the anti-gambling crackdown… to eliminate 20% to 70% of live streaming revenue, depending on each platform’s exposure.“

Charlie Chai, analyst for 86Research

Earlier this summer, the Payment and Clearing Association in China confirmed that some $277 million in payments for illegal gambling platforms were blocked for last year alone. The report reaffirms the dedication of the country to fight against such activities at all costs and reduce the money leaking into illegal gambling.

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Fanatics Sportsbook, the sports betting arm of the popular sports merchandise brand, is reportedly in talks to acquire the US business of the Australian sportsbook operator PointsBet.

Sources Claim Negotiations Are Ongoing

Fanatics is in advanced negotiations to acquire the US assets and operation of troubled sportsbook operator PointsBet, including its innovative “PointsBetting” apparatus, Sports Handle reported today.

According to two separate unnamed high-level industry sources of the media, there is a high chance that a deal could be announced early next week, while a third source said that it would be surprising if there is not “quite a bit of paper” around the deal by then.

The possible acquisition of PointsBet will represent a major step for Fanatics in achieving its objective to gain market access in 12 US jurisdictions with legalized sports betting by the 2023 NFL season as part of a major plan to eventually become present in every major state with legal sports wagering.

With market access in 14 states, among which major sports wagering jurisdictions New York, Illinois, New Jersey, Michigan and Pennsylvania, and an in-house tech stack, PointsBet is viewed as a possible acquisition target by Fanatics and rumors of a possible deal for PointsBet’s US business initially surfaced in 2021.

Feeling the Heat from Competitors

Problems for PoinstBet USA began surfacing in February when the operator withdrew from launching its dedicated app in Massachusetts due to the intense competition in the US online sports wagering space dominated by DraftKings, FanDuel and BetMGM.

In April, PointsBet hired a prominent financial advisory services firm to seek a buyer for its US business, stirring rumors that it is seeking a way out of the US, and later in the month, the operator officially stated its intent to divest its US and North American business.

PointsBet also suffered from industry setbacks and had to terminate betting partnerships with the University of Maryland and the University of Colorado, following the latest update of AGA’s Responsible Marketing Gaming Code for Sports Wagering.

The operator also became embroiled in a crypto phishing scam and had to temporarily halt its email communications system after it was breached by a third-party provider which sent emails involving an unsolicited crypto offer.

Fanatics Sportsbook became operational in its second and third US jurisdiction on May 1, after launching its mobile app in Tennessee and Ohio. Until then, the brand was present with only one retail location at FedExField in Maryland, where it launched in January.

Fanatics Sportsbook is also eyeing a June launch of its mobile app in Massachusetts, where it received its online sports betting license via Plainridge Park Casino.

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