As legal sports betting spread across the country, media companies with deep local or national platforms have considered how to best position themselves to capitalize on the billion-dollar industry. Some attached their names to sportsbooks, others signed exclusive advertising deals with specific operators.

Performance marketing company Gambling.com Group has offered a different path. In the last few years, it has signed deals with Gannett and McClatchy, two of the country’s biggest newspaper owners, to take over much of their digital sports betting coverage. Gambling.com creates content designed to draw bettors to sportsbooks, which pay for each successful referral. The newspaper owner and Gambling.com share in the revenue from those referrals.

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The set-up allows both sides to focus on what they do well, according to Gambling.com founder and CEO Charles Gillespie. Newspapers such as USA Today (owned by Gannett) and the Miami Herald (owned by McClatchy) have avid readers, trusted legacy brands and websites that rank very well in search engines. Gambling.com has experience in creating content —such as reviews, explainers and analysis—that makes readers more likely to hit a button and deposit money into a sportsbook.

“It’s safe to say that this model has emerged as the highest and best use in terms of ways for legacy media companies to leverage their assets to make money off of sports betting,” Gillespie said in an interview. “Fundamentally working with all of the operators, not a single operator, and leveraging the experience, technology and know-how of the largest performance marketing companies to ensure the largest maximum return.”

Sports betting affiliate deals typically come in one of three forms—a set fee for every new customer, a set percentage of revenue produced over the lifetime of that customer, or a hybrid of both. Peter McGough, Gambling.com’s SVP for investor relations, declined to comment on the specifics of the company’s media deals, but said the strategy makes up roughly 15% of the company’s total revenue, which was $108.7 million in 2023.

The company’s quarterly filings provide a bit more insight. A large majority of Gambling.com’s cost of sales is the money it pays its media partners for their share of referrals (the rest, according to the company’s annual report, is for payment solutions related to subscription revenue). In fiscal 2023, the company reported cost of sales of $9.1 million. If, for example, the revenue split is 50-50, that means the media strategy brought in almost $18 million in 2023.

Gannett (NYSE: GCI), which owns more than 100 local papers along with USA Today, reaches about 140 million unique people per month, and about 50 million of them are sports fans. The company has been looking for partnerships that increase engagement and generate additional revenue to fund its journalism, according to CEO and chairman Mike Reed.

“So how do we monetize that audience knowing they’re not all going to be paid subscribers for news,” Reed said in an interview. “Partnerships like we have with Gambling.com are a way for us to create revenue streams that we didn’t have before.”

The company has other performance marketing deals—in areas like personal finance and home services—but the relationship with Gambling.com is its most lucrative, Reed said. He declined to provide specifics about the economics.

Gannett has editorial approval over anything published under its banner, Reed said. Content made by Gambling.com that runs via USA Today has bylines that label who made it. It also has a disclaimer that says its editorial staff was not involved in the creation of the content, and that the company “may earn a fee if you make a purchase through one of the links in this article.”

For Gambling.com, the strategy is akin to “renting office space,” McGough said. The company has dozens of sites that it owns and operates—such as Casinos.com, or BetCarolina.com—but it takes time and investment for those sites to rank highly in online searches. Legacy media companies such as Gannett and McClatchy, on the other hand, have websites that have been publishing since before the Google algorithm existed.

“You can spend a lot of money building that, or you can partner,” McGough said in an interview. “It’s a build or rent approach to a portfolio of assets.”

This media partnership model originated in Europe. Better Collective, another performance marketing company, signed a 2019 partnership with the U.K.’s Daily Telegraph, and now has additional deals with Goal, the New York Post and Germany’s Sport1. In addition to the two U.S. media partnerships, Gambling.com recently signed one with The Independent in the U.K., its first in this strategy outside North America.

While the economics might be a bit better for the company if a new gambler signs up for DraftKings via BetCarolina.com as opposed to a link on USA Today, the media partnership strategy produces high margin revenue. And the legal U.S. market, which saw $120 billion in wagers last year, has a lot of room to grow.

For starters, legal sports wagering is currently live in 38 states, and doesn’t yet include the two most populous, California and Texas. As new states launch (like recent newcomer North Carolina), the network of papers under the Gannett and McClatchy umbrellas (such as the Charlotte Observer) become big business opportunities for referring new bettors.

There’s also penetration growth in states that have already launched, new marketing initiatives toward groups (like women) that were often overlook in the early months, and new residents turning 21. Online casino gaming, or iGaming, holds another round of opportunity, with a much larger addressable market, if more states legalize it in the coming years.

That doesn’t mean Gambling.com is rushing to find new media partners in the U.S. The company’s strategy is to work with the biggest, McGough said, and between Gannett and McClatchy they have a lot of the county covered.

“We’ve tried to go to the No. 1 and No. 2 biggest player in news media in those markets and pull the trigger,” he said. “When you think of ‘go big or go home,’ there’s only one or two partnerships in the U.S.”

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