Murdoch’s Next Play: Fox Hopes to Seize Advantage in Sports Betting Boom

Murdochs Go All in  on Sports Betting - Photo illustration-H 2019
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The newly formed Fox Corp. makes a $236 million deal to become a first-mover in an area with a "compelling" long-term opportunity that Disney won't touch.

Rupert Murdoch has a long history of taking bold swings. Now his newly formed Fox Corp. is betting on, well, betting. The company, created in the $71.3 billion sale of large parts of 21st Century Fox to Walt Disney Co., unveiled a deal May 8 between its Fox Sports unit and online gambling giant Stars Group to launch Fox Bet this fall, the first national media and sports wagering pact in the U.S.

While daily fantasy sports leagues like DraftKings allow players to place wagers on athletes' performance statistics and ESPN's Daily Wager provides analysis, Fox Bet will offer national free-to-play games with prizes for predicting match outcomes and live wagering in states that have legalized it. Fox also agreed to acquire a 5 percent stake in Stars Group — featuring brands like PokerStars and BetStars — for $236 million, with the right to convert the commercial partnership into a 50-50 U.S. joint venture at any point during the next 10 years.

"We’re entering the space aggressively, ambitiously, but also responsibly and with great care to respect both the interests of the betting audience and the non-betting fan alike," said Fox Sports CEO Eric Shanks at a May 9 Fox Corp. investor day.

Taking advantage of the legalization of sports gambling in eight U.S. states since a 2018 Supreme Court ruling allowed them to do so gives Fox the opportunity to diversify its revenue streams and expand the reach of its Fox Sports brand, according to industry watchers.

CFRA Research analyst Tuna Amobi tells The Hollywood Reporter that the revenue opportunity for Fox is "perhaps not quite a low-hanging fruit," but, he notes, "the potential long-term opportunity in the U.S. could be very compelling." Matthew Harrigan of Buckingham Research Group lauded Fox for leading the charge. "This is certainly more creative and potentially higher returning than simply bulking up Fox's TV station footprint," he said in a report.

How big a U.S. market opportunity does wagering provide? During investor day, Shanks shared forecasts mentioning a market worth billions of dollars. "Fox Bet will be a trailblazer in using the strength of a major media company to develop this enormous potential with digital-first products," said Shanks. And having the first-mover advantage will give the company a leg up, he signaled. "In time, the expansion of legal wagering will drive fan engagement and in turn viewership and will become a growth category for sports advertising."

Shanks shared company research indicating that more than a quarter of Americans would consider using a Fox Sports wagering platform. "That’s a figure that’s 50 percent higher than the largest daily fantasy sports operators and larger than any casino brand," he said.

Will Fox's push into the space set off a race between media giants to follow the Murdoch empire into the wagering world? "Gambling for these companies seems inevitable or unavoidable," says Hal Vogel, former analyst and CEO of Vogel Capital Management. "But it is fraught with problems that will also unavoidably emerge over the long term." He explains, "It takes only a few unethical players to create a scandal."

"I wouldn’t be surprised if some other media companies, especially those with potential natural adjacencies to sports wagering, gradually begin to dip their toes into online sports betting," Amobi notes. "However, given potential minefields (and the learning curve) in this nascent market, I think it’s still a long way from mainstream participation by the major media and entertainment companies."

But at least one Hollywood giant has ruled out a push into wagering. "We’ll provide programming that will, I guess, be designed to enlighten people who are betting on sports," Walt Disney chairman and CEO Bob Iger said on a May 8 earnings call. "But that's as far as we would go. And I think you'll see more of it integrated in the programming, but we just don't intend to go into the gambling business."

This story first appeared in the May 13 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.