New Customer Offer
theScore founder John Levy's new big bet: becoming a sports bookie in the legalized U.S. market
25th November, 09:49This is it. This is the chance. This is the moment John Levy has been waiting for. Ever since 1994, when he bought a sports ticker channel and then later won a broadcasting licence for what he called Headline Sports. Ever since 1999, when he sold the Hamilton cable business built by his father, Cecil, in order to focus on television and launch what became theScore. Ever since he started a sports news app that gained a foothold on the first BlackBerrys and iPhones. Ever since he spent $15 million to revamp his brash TV channel and "blow the hell out of those other guys," TSN and Sportsnet. Ever since he abandoned his channel, selling theScore's TV assets to Rogers in 2012 for $167 million to go all in on his app. Ever since he saw it become the second-ranked sports app in the United States behind only ESPN. Ever since...well, ever since John Levy started dreaming of hitting the big one, this is the opportunity he knew would come. In May 2018, when the United States Supreme Court struck down the law that had made sports betting illegal, it opened the door for individual states to legalize sports betting and for Levy to make good. It gave him the chance to leverage his foresight, his chutzpah and his four million app users, and realize the dream embedded right there in his brand -- theScore. His company is in the gambling business for real now, and like he tells everyone, "We're all in."
Are you a betting man?
I could answer that by saying, "That's a silly question."
Yes. Not anymore. Which has been an adjustment. Since becoming a bookie, which is what we are -- the only sports media company to actually be in the game as an operator, as a licensee -- I am not permitted to bet on sports, with certain exceptions. I used to bet on sports a lot.
I'm curious now, because I sense a little tension around this issue --
No. That, for sure, you wouldn't do. There are actual regulations. In terms of our licence in New Jersey, for example, one of the things we have to be very careful about is knowing who's betting with us, and if we suspect somebody's betting on behalf of other people, that's a big no-no.
How much money would you have put on the U.S. Supreme Court reversing the federal law against sports betting? (1)
We always thought that, at some point, governments would wake up. There's a huge business out there, unregulated, and for all the reasons they worry about sports betting, they are actually better protected by regulating it. Not to mention the fact that they're going to make a crapload of money in terms of taxing it and licensing it. So our belief always was that at some point it's going to get real. When? We didn't know. And in that regard we always stayed perfectly clean. We knew our customers were betting on sports. We could have gone grey market, (2) like a lot of the other guys, and probably taken in a lot of money. But we always wanted to stay pristine. Because when it happened, we wanted to be able to step forward with clean hands.
You were aiming to launch theScore Bet app in New Jersey before the start of football season. How'd that go?
We made it. A Herculean effort by the team here. We'd had discussions before PASPA fell, because it had been in our minds forever. We'd thought about going to Europe and doing something over there. Once PASPA fell, it became real in a hurry. So what do we do? The first thing is, I go to my engineer and say, "Let's create a betting app." He says, "It's going to take me two and a half to three years, and I need $40 million or $50 million." Well, I can't wait that long. That's not sensible. So we started to look at third-party suppliers of betting technology. We went to all the big players and eventually met with the people from Nevada: Bet.Works, David Wang's company. Then we had to get a licence in New Jersey. Bet.Works introduced us to Dennis Drazin, who worked with Governor Christie to get PASPA repealed and get the laws changed in New Jersey. This guy manages a racetrack called Monmouth Park. Under the regulations in New Jersey, each casino owner or racetrack was given three skins apiece.
I've heard the term "skins." Tell me what it means.
I don't know why they call it a skin. It's a licence. The local government ordained that it's good to protect the existing players, being casino and racetrack guys. "We are going to allow you three skins apiece, which you can sublicense or operate on your own or do whatever you want with them." Dennis had already licensed two of his skins. He had one left, and we got it. It was a lot of work to take the Bet.Works back-end technology and create the front end, theScore Bet. And our guys did it.
Where does Penn National Gaming (3) fit into this?
Our view was that New Jersey was just the beginning. A few other states were passing legislation, and there were major operators who were seeing the opportunity -- the Hard Rocks and MGMs of the world. We had to get access in other states. So, even as we did our New Jersey deal, we were talking to all the big guys and ended up doing a deal with Penn National, which allows us access to 11 more states as they create their regulations. (4) That gives us coverage of about 30% of the U.S. And we are still engaged in discussions, because we want to cover every state as they come on board. For example, New York and Florida are not part of the deal with Penn.
Your 2019 AGM in January -- who was in the audience for that?
Uh, a lot of our staff, because we held it right here. And some of the people we have banking relationships with, like the banks that helped us with the sale of the TV assets.
All right. When you got up and said, "Yes, it's true -- sports betting is coming to theScore," you got a very tepid response.
You actually had to goose them and say, "Come on!" and raise your fist. Why?
You know the Canadian market. If you're not oil and gas, minerals or marijuana, nobody gives a sh-- about you, okay? Up here, we are a public company. It's all retail. In retail, people start buying, and then they buy more. People start selling, they sell more. Nothing to do with the business. You're right -- I'm up there, excited as hell. I know what's coming. And it was like, "Turn the lights on, nobody's home." And quite frankly, it's still the case. Look what we're trading at today. Nobody gets it up here! Nobody! But it's going to change.
You think so? Based on what?
Based on, eventually we are going to be in the States, where our business is. As the brand grows, as we do more and more in the U.S., ultimately this will be a public company listed in the U.S. When we start to tell the story in the States, it's a different reaction. People get it.
You launched theScore Bet around the same time Fox Sports launched its betting app. Apparently they put $236 million toward it. How much are you putting into yours?
As much as it takes to make it the best app in North America. We get this question a lot. "How are you going to compete with the big guys, who are throwing hundreds of millions of dollars at this thing?" Our answer is, and I don't mean to be flippant about it, but we've competed in that market forever, and we've got the second most popular sports app in North America. You'll see. We're going to be in the market against these guys, and I think, over time, we're going to beat the heck out of them, regardless of how much they spend.
Can you give me a ballpark of how much you've invested?
We've invested enough to do a deal with Penn National. We're investing enough to do a deal in New Jersey. We've got a skin there. We had to pay up for this stuff. You're going to see, not overnight but over time, that we are going to command a significant share in those markets.
Why are you being cagey?
I don't mean to be cagey. What we spend is publicly released. Our Q1, which ends in November, gets reported early in the new year. So you're going to start to see some numbers from us in terms of how we're doing in the early days in New Jersey and some of our other plans. But there's a lot of competition. I don't want to tell you how much I spent in the first month in New Jersey because I don't want our competitors to know.
Is sports betting the thin edge of the wedge? Do you anticipate moving into other kinds of gaming?
Yeah, we will do that in states where it's legal, where it's kosher. And our deals, for example with Penn, allow us to do that in the States. We have not launched that in New Jersey yet. It's on the road map. Online poker, online blackjack, online slots -- all that sort of stuff.
It's been said there's US$5.2 billion in potential net gaming revenue for sports betting operators. Are you targeting 20% of that, 10%?
I gotta be really careful. I don't see any reason why, over time, we can't own 10% of that market. Three years from now, if we're not one of the top players, I'd be very surprised.
How close are we to legalized sports betting in Ontario?
I wouldn't have said this until the past three or four months, but I would think within the next 12 months, you'll probably see it in Canada.
What are you doing to speed that up?
We're lobbying, talking to Ontario government officials. How it's going to open up is a question. Is it going to be through the same pattern they originally used with casinos? Is it going to be through the OLG [Ontario Lottery and Gaming] in Ontario? Or is it going to be directly through independent companies like ours? To be determined. But we have been very involved.
Are there other legal details to be worked out?
Yes. There's one provision in the federal Criminal Code that prevents single-event wagering -- i.e. betting on a game. Indications prior to the election were that there was a possibility that might get changed. In Ontario, if you read between the lines of how aggressive the premier is about it, he's saying, "We're going to go even if it doesn't get changed. Because we're going to do everything except single-event betting." (5)
Gambling is not the innocent fun that being a sports fan is. Are you going to impose limits on betting?
Oh, absolutely. Listen, our brand is on this. I don't want to hurt people. I don't want to abuse people. I want people to have fun and enjoy sports and love our product, and I just want to make it available to them. And to the extent that people are getting hurt, we'll be on that.
'Cause they ask me this all the time. "When are you going to f---ing slow down?" I'm just having too much fun. There's no limits on this thing. It's going to be tough. We're going to have ups and downs; I'm going to get sh-- from a lot of people, looking at results. Is it working? I mean, I hear it today, right? After four freaking weeks. "Let me see your numbers." Call me in a year.
Is this your way of saying you're not stepping away any time soon?
I can never predict. This is a huge opportunity. I mean, I wish I was 20 years younger, 30 years younger. I know my kids don't. But honestly, this is the beginning of something dramatically different. I mean, I've loved everything we've done, and it was profitable. We made a lot of money. But this thing is mind-blowing. We love to create stuff. And we love to create stuff the other guys don't think is worthy. It's all this underdog sh--, right? I mean, "You can't do this." Okay, sit back and watch. 'Cause we're going to do it.
This interview has been edited and condensed.
Trevor Cole is the award-winning author of five books, including The Whisky King, a non-fiction account of Canada's most infamous mobster bootlegger.
1. In May 2018, the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) of 1992, which had rendered sports betting largely illegal outside Nevada.
2. A number of online bookmakers, such as William Hill, Bet365 and Betway Sports, set up gambling operations in offshore locations, allowing North Americans to gamble. Even after U.S. lawmakers clamped down, the practice continued to flourish in Canada.
3. Penn is the largest regional gaming operator in the U.S. Through a placement of shares, theScore paid Penn US$7.5 million for its licence. Like Monmouth Park, it will receive a percentage of theScore Bet's net gaming revenue.
4. TheScore plans to launch betting operations in Iowa and Indiana sometime within the next year.
5. This would allow "parlay bets," which can combine multiple games and point spreads in a single bet, or "proposition bets," which involve betting on the occurrence of events within a game.