Fox 's plan to be a major player in sports betting has hit a snag with the fledgling sports betting site Fox Bet struggling and the company failing to resolve ongoing ownership issues with its Irish partner Flutter Entertainment, owner of Paddy Power.
The three-year-old site, heavily promoted on Fox TV networks, is only available in four US states, and Fox chief executive officer Lachlan Murdoch said he's unhappy with the progress.
“We don’t control it – because we’re not allowed to,” Murdoch said at an investor conference on March 10th. “It’s only rolled out in four states, which we’re disappointed in, and we’d like to see it rolled out in many more.”
Sports betting has exploded in the US since the US Supreme Court permitted its expansion in 2018, and 30 states now offer it. But some operators are having a hard time gaining traction in the already crowded field. Golden Nugget Online Gaming is selling itself to DraftKings. Caesars Entertainment and Wynn Resorts have sharply cut back on their marketing spending as they look to find profitability.
The relationship between Fox, the TV company controlled by the Murdoch family, and Flutter is a complicated one. It began when Flutter bought the Stars Group, the online betting company that created Fox Bet with Murdoch, in 2019.
Flutter now owns Fox Bet, and Fox has an option to acquire 50 per cent of that business. But Flutter already has a large and industry-leading sports betting site in FanDuel. Fox Bet has less than 1 per cent of the US online sports betting business outside of Nevada, compared with 40 per cent for FanDuel, according to Vixio GamblingCompliance.
"FanDuel has been so phenomenally successful it's hard not to make the argument for investing more into that brand, especially in such a competitive market, rather than spreading any investment across a dual-brand strategy," said James Kilsby, an analyst who follows the industry at Vixio.
Fox also has an option to purchase 18.6 per cent of FanDuel. The parties can’t agree on a price to exercise that option, however, and they’re set to go into arbitration in June.
Problem for Murdoch
The poor performance of Fox Bet is a problem for Murdoch, who calls sports betting a "huge opportunity" for his company, which is much smaller now after selling the bulk of its entertainment assets to Walt Disney. Fox had previously utilized its UK TV business to create Sky Bet, which was sold to Stars Group for $4.7 billion (€4.3 billion) in 2018.
The Fox Bet brand launched in 2019 with much buzz in the sports betting world, given its pedigree, but its technology has lagged, according to Steven Ruddock, senior analyst at Wagers. com, a website that tracks the industry.
The app is “operating on what can best be described as a legacy platform that hasn’t received the updates required to compete in the US,” Ruddock said.
Fox airs the TV show "Fox Bet Live" on its FS1 network. The company has used on-air personalities such as Terry Bradshaw and Clint Bowyer to promote Fox Bet. It's deployed Fox Bet Super 6, a free-to-play contest touted during NFL games, as a way to acquire some six million potential betting customers.
Murdoch said he could envision a scenario where Fox would be licensed by gambling regulators to own a significant stake in a betting business, but he didn’t think the company would operate such a business.
Fox is “in active conversations with Flutter in terms of our relationship and how we handle it going forward,” he said.
Flutter chief executive Peter Jackson said on a March 1st earnings call that the company has had talks with Fox to resolve the issue of its option to invest in FanDuel but hasn't reached any agreement.
“If we can’t get the deal that’s right for our shareholders, we’re very comfortable going to arbitration,” Jackson said.
The companies declined further comment. – Bloomberg
