Former HBO Sports president Ken Hershman is betting it all on the sports wagering industry.
In April 2021, the award-winning sports TV programming executive co-founded Champion Gaming Group Inc (TSX-V:WAGR), which offers sports wagering data, advanced analytics, and exclusive content.
Champion's products and services are designed to give seasoned sports bettors the independent tools, data, content, and simulations to empower their sports wagering activities.
“Sports wagering is one of the fastest-growing global markets and that was attractive to me. The ability to use my background in connecting sports and storytelling to this new booming market was also very appealing,” Champion Gaming co-founder and CEO Hershman told Proactive.
Hershman has been one of the top power brokers in sports. Fight fans credit Hershman for bringing the most exciting boxing fights to HBO and rival Showtime. Hershman has also championed mixed martial arts. He has a legal background with finance and securities experience as an associate at Shearman & Sterling.
“I've been fortunate over the course of my career to work with great teams of executives and creative talent and be a part of creating some of the most widely-acclaimed programming as a result. Being able to bring that formula to this new space is exciting,” added Hershman. “And it's already paying great dividends.”
With Hershman’s credibility, Champion just raised $3.65 million and has completed the acquisition of EdjSports, the parent of Football Outsiders. The group’s base of operations for EdjSports is in Louisville, Kentucky, while Hershman is based in Manhattan.
Sports wagering goldrush
A combination of population size and a passion for sports could make the US one of the world's most lucrative sports betting markets.
“Currently, almost 40% of the US population has access to online sports wagering. According to the American Gaming Association, there’s $13 billion of sports betting today, and I predict the industry will soar past $100 billion in the near future,” noted Hershman. “We're excited to be a part of that ecosystem.”
Since the US Supreme Court struck down a federal ban on sports betting in 2018, 32 states, plus Washington DC, have legalized sports betting.
Champion’s core market is the US, but it’s looking to expand globally beyond North America.
“In terms of market size, there are five billion sports fans globally and an acceleration of legalization in core markets,” pointed out Hershman.
Portfolio of marquee brands
With the stakes high, Hershman has built a strong portfolio of brands. Champion Gaming (TSX-V:WAGR) acts as an umbrella for three different brands that create targeted data and expert content.
Here is a snapshot of the brands:
- Edjsports LLC: A sports data and analytics company that provides insights through simulations and algorithms on a business-to-business basis, as well as to consumers through its website. It has sportsbook agnostic betting tools and prescriptive analytics used by National Football League (NFL) teams, as well as media.
- Football Outsiders: Aaron Schatz, the father of football analytics, built this NFL football analytics website, which also covers the National Collegiate Athletic Association (NCAA), and fantasy football. It’s known for its Defense Adjusted Value Over Average (DVOA) and Defense Adjusted Yards Above Replacement (DYAR) NFL metrics.
- EdjVarsity - A predictive play-calling analytics tool for high school football programs. The software-as-a-service (SaaS) decision-making tool has over 70 high schools using it in-game to guide their coaching decision-making.
“Our brands have a growing audience — we’ve seen over 2.5 billion impressions in 2020 across channels for EdjSports and Football Outsiders,” said Hershman. “Our NFL-focused EdjSports is now expanding into new sports including the National Basketball Association (NBA), Women's National Basketball Association (WNBA), and golf. Football Outsiders is an advertiser-supported free service, and also offers the ability to subscribe to more robust tools and content through its Football Outsiders Plus offering.”
Champion has also cemented a partnership with Inpredictable, an analytics website on the NBA and WNBA, to expand beyond EdjSports’ NFL roots. Inpredictable founder, Michael Beuoy, will help develop win probability models for horse racing, soccer, and tennis.
“Inpredictable will expand the sports we cover and smooth out that revenue and traffic model as we go through the year as the NBA and WNBA are on different schedules than the NFL,” said Hershman. “It will help us build skill sets in the data science and analytics category around games that are freer flowing than American football. Inpredictable gives us a head start in refining products as we move into basketball, soccer, and hockey globally.”
Moreover, Champion also has a partnership with Massey Ratings, which provides objective team evaluation for professional, college, and high school sports, allowing Champion to build analytics around more than 20 sports.
Diversified revenue streams
Wall Street loves Champion’s business model which enjoys predictable revenue through annual and monthly subscriptions. In addition to its smart recurring revenue model, Champion will enjoy additional revenue streams from licensing, sponsorships, advertising, and revenue sharing with sportsbook affiliates.
In the first six months of 2021, Champion’s flagship asset, EdjSports, clocked up $1.5 million in revenue from its licensing and subscription offerings.
“We’ve diversified our revenue streams to spread across many sports to reduce the cyclical nature of our business which historically was principally NFL,” said Hershman. “In the NFL off-season, traffic and revenue would decline and come back in the regular football season. As we expand to 365 days a year coverage of other sports, we even that revenue out.”
Champion Gaming (TSX-V:WAGR) said it is building a “loyal audience” and how it monetizes that audience will evolve.
“Advertising obviously plays a role in that revenue mix, but we're building a diversified revenue model which also includes sponsorships,” said Hershman. “Affiliate referral fees from our sportsbook partners are a big part of our plan and we continue to look for ways to expand our B2B licensing revenues for big data and analytics products; as well as white labeling our content — offering it to media. We're excited by the opportunity to pull revenue from a variety of sources.”
Champion will develop an affiliate program and make money on referring new customers to sportsbooks. “We've applied for affiliate licenses in several states and expect to be able to confirm many of those in 2022,” said Hershman.
Not a one-trick company
Champion's products are aimed squarely at sports bettors, teams, players, and media.
“For NFL football games, we have coaching decision-making tools and analytics that help teams,” said Hershman. “We are very proud of our relationships with NFL teams. They are our core customers and a very important part of our credibility in the industry.”
Similarly, Champion has applications that allow broadcasters to hone in on moments during a game and evaluate coaching decisions or plays that go one way or the other impacting the winning probability for a team and its rival.
“Our diversified revenue model underscores why I think our company can grow,” said Hershman. “We have such high expectations for where we are going precisely because we're not a one-trick company.”
Bullish on live betting
Hershman hopes to soon join the scrum for free-spending live sports wagering information customers. He said that a lot of Champion’s product and content development is now focused on in-play betting. This mirrors the uptick in live betting in the NBA, NFL, and Major League Baseball (MLB).
“The live betting segment is going to be huge as US betting markets mature. Our analytics capabilities are perfectly attuned to helping people in their in-play betting strategies,” said Hershman. “We're looking to bring those products to market — it's an important component of what we do.”
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive