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Nearly two years ago Rupert Murdoch, the powerful magnate of the media empire News Corp, decided to jump into the sports betting fray.
For the most part, the venture has offered up some branding success. Fox Bet is widely visible throughout sports broadcasts of Murdoch's prized Fox Sports network as well as FS1.
The sports betting efforts from News Corp.'s Foxtel, an Australian pay television company, at the time were looking to combine with the betting operations at Fox Bet, a partnership between Fox Sports and betting operator The Stars Group, Axios reported back in October of 2022.
Lachlan Murdoch, Rupert's son, was slated to take over the new entity.
Now the Financial Review is reporting that the Murdoch's betting play is falling apart.
A year ago, News Corp was pouring money into Betr, its joint start-up with gaming entrepreneur Matthew Tripp. The key to this transaction was the plan heavily pushed by Lachlan to merge News Corp and Fox Corp, with Betr becoming the Australian version of Fox Bet. Betr would be the first example of Fox/News synergy.
Back in January, Lachlan put a halt on the Fox News merger idea, thus spelling an end to the plans with Betr.
But with Fox Bet, the Murdoch's already have their betting brand in the US. The future was not looking good for Fox Bet last fall.
Fox emerged from last November’s mediation tussle with UK giant Flutter Entertainment with confirmation that it has a valid 10-year option to buy 18.6 per cent of Flutter’s FanDuel, which claims to have half the US online betting market. FanDuel is yet to break even, but the sliding option deal currently values it at $US22 billion.
Who Operates Fox Bet Explained
Here's how this deal works. Lachlan wanted to develop a betting brand (Fox Bet) and use the Fox Sports platform as a springboard to promote the sportsbook. But Lachlan did not want Fox Sports or any of his businesses to actually run the book. That's where Flutter, FanDuel's parent company, comes into play. Flutter also owns PokerStars (The Stars Group) and Paddy Power.
Lachlan's original deal was with The Stars Group back in 2018, but they were later acquired by Flutter and fell under the same umbrella as FanDuel. As a result, Flutter inherited control of Fox Bet. FanDuel had already captured around half the US regulated sports betting market share. Fox Bet was suddenly thrust into the role of red-headed stepsister. Lachlan claimed Flutter deprived the company of funds. The Judicial Arbitration and Mediation Services concluded otherwise last November.
Despite the Fox Bet name being plastered all over millions of television sets each football season, the software is said to be clunky. The brand is also only available in four US states and barely encompasses 1 percent of the overall market share.
Next Move
Flutter can walk away from the Fox Bet joint venture next month (August 2023), which means either Fox steps up with its own funding and organization to run it, or the Fox Bet brand goes the way of the dinosaurs.
There are tough decisions to be made ahead. Fox Bet hasn't exactly paid off but the Murdochs appear to be placing that blame on what they perceive to be Flutter's mismanagement.
Regulated sports betting has proven lucrative in the States....for the states. No operator is yet to consistently turn a profit.
Of course they can also move into the hybrid daily fantasy sports space that sites like PrizePicks currently dominate. This allows Fox Bet entry into more states without the need to secure high licensing fees. There is also a likely tax incentive in doing so.
Fox Bet tends to focus more on contest promotions, which better aligns it with the DFS business model anyway.
- Aaron Goldstein, Gambling911.com
