Publisher Gannett strikes first of its kind deal with sports betting outfit

© Reuters. FILE PHOTO: The corporate flags for the Gannett Co and its flagship newspaper, USA Today, fly outside their corporate headquarters in McLean, Virginia, July 23, 2013. REUTERS/Larry Downing (UNITED STATES/File Photo

By Helen Coster

(Reuters) - Gannett, the largest newspaper chain in the United States, is partnering with a sports betting company - the first deal of its kind for a major U.S. newspaper publisher.

In a 5-year deal worth over $100 million, the publisher of USA Today, local papers published in 46 states and over 200 sports websites is teaming up with Tipico USA Technology, the American division of German sports betting provider Tipico Group.

Tipico will provide sports betting odds for Gannett’s sports content. Gannett will embed either a button or an icon for Tipico in its sport content and receive a referral fee for traffic that leads to first-time bettors on Tipico’s platform. Tipico will also spend $90 million on Gannett advertising and sponsored content, including videos, columns, blog posts and events.

As more states have legalized sports betting, media companies have turned to the sector to diversify their revenue. In May the Associated Press struck a deal with sports betting company FanDuel, through which FanDuel pays the AP to include its sports odds in coverage. Both ViacomCBS-owned CBS Sports and Walt Disney (NYSE:DIS) Co's ESPN have partnered with companies that provide sports betting odds. Fox Corp launched the FOX Bet sports betting platform in 2019 through a partnership with sports betting operator The Stars Group (NASDAQ:TSG_old).

It is unclear what benefits these deals have yielded. Sun Bets, a partnership between the Rupert Murdoch-owned British newspaper The Sun, a unit of News Corp (NASDAQ:NWSA), and Australian gambling group Tabcorp Holdings closed in 2018 after disappointing financial performance.

Gannett had previously struck a deal with BetMGM in which the joint venture between MGM Resorts (NYSE:MGM) and GVC Holdings paid Gannett for advertising and referrals.

In an interview, Gannett Chief Executive Michael Reed said he hopes the Tipico deal will serve as a model for partnerships with other companies in sectors such as events and entertainment. “It's not an advertising play,” Reed said of the deal. “It’s building a new brand and customer base for a business that happens to be in a legalizing, fast-growing new business sector.”

In addition to the advertising and referral fees, Gannett will get a 1% equity stake in Tipico USA Technology upfront, with the option to acquire a total stake of 4.99% within the next five years.